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HomeLife Life Insurance Company has two service departments (actuarial and premium rating) and two production...

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Accounting

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:
From To
Actuarial Premium Rating Advertising Sales
Actuarial 80%10%10%
Premium 20%2060
The direct operating costs of the departments (including both variable and fixed costs) are:
Actuarial $ 98,000
Premium rating 33,000
Advertising 78,000
Sales 58,000
Req3: Determine the total costs of the advertising and sales departments after using the reciprocal method of allocation.

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