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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: Premiumm ng Sales rom Actuarial- Premium 20% - 75% 10% 20 15% 60 The direct operating costs of the departments (including both variable and fixed costs) are: Actuarial Premium rating Advertising Sales S88,000 23,000 68,000 48,000 Required 1. Determine the totail cost allocated to the advertising and sales departments using the direct method Total Cost Allocated Advertising department Sales department 9102 20
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