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:

ToFromActuarialPremium RatingAdvertisingSalesActuarial80%10%10%Premium20%2060

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

Actuarial$ 92,000Premium rating27,000Advertising72,000Sales52,000

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.

Rquirement 1:

Determine the total costs of the advertising and sales departments after using the direct method of allocation.

Total Cost AllocatedAdvertising departmentSales department

Requirement 2:

Determine the total costs of the advertising and sales departments after using the step method of allocation.

Total Cost AllocatedAdvertising departmentSales department

Requirement 3:

Determine the total costs of the advertising and sales departments after using the reciprocal method of allocation. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)

Total Cost AllocatedAdvertising departmentSales department