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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 Eating sex Actuarial From Actuarial Precios Advertising 103 20 Sales 10% 50 20% The direct operating costs of the departments (including both variable and fixed costs) are Actuarial Premius rating Advertising Sales 5 89,00 24,000 69,000 49,000 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
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