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HomeLife Life Insurance Company has two service departments (actuarial and premium rating} and two production departments [advertising and sales). The distribution of each service department's
HomeLife Life Insurance Company has two service departments (actuarial and premium rating} and two production departments [advertising and sales). The distribution of each service department's efforts (in percentages} to the other departments is shown in the following table: To Premium From Actuar-ial Rating Advertising Sales Actuarial 19% 15% 15% Premium 28% 29 68 The direct operating costs ofthe departments {including both variable and fixed costs) are: actuarial $ 81,999 Premium r'ating 16,698 Advertising 61,998 Sales 41,998 Required: 1. Determine the total costs ofthe advertising and sales departments after using the direct method of allocation. 2. Determine the total costs of the advertising and sales departments after using the step method of allocation. 3. Determine the total costs of the advertising and sales departments after using the reciprocal method of allocation. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Determine the total costs of the advertising and sales departments after using the direct method of allocation. Advertising department Sales department
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