HomeLife Life Insurance Company has two service departments (actuarial and premium rating) and two production departments (advertising and sales). The distribution of each service departments efforts (in percentages) to the other departments is shown in the following table:

	To
From	Actuarial	Premium Rating	Advertising	Sales
Actuarial		70%	15%	15%
Premium	20%		20	60

The direct operating costs of the departments (including both variable and fixed costs) are:

Actuarial	$ 97,000
Premium rating	32,000
Advertising	77,000
Sales	57,000

Required:

1. Determine the total costs of the 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.