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Better Health Company has two service departments actuarial and premium rating, and...

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Question

Accounting

Better Health Company has two service departments actuarial and premium rating, and two operations departments marketing and sales. The distribution of each service department's efforts to the other departments is shown below:

FROM TO
Actuarial Rating Marketing Sales
Actuarial 0% 40% 20% 40%
Rating 25% 0% 37.5% 37.5%

The direct operating costs of the departments (including both variable and fixed costs) were as follows:

Actuarial $ 52,000
Premium Rating $ 30,000
Marketing $ 52,000
Sales $ 62,000

The total cost accumulated in the sales department using the step method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar; assume that the actuarial department goes first):

Multiple Choice

$83,800.

$87,800.

$108,200.

$112,200.

$117,200.

Answer & Explanation Solved by verified expert
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