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

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Accounting

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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 efforts in percentages) to the other departments is shown in the following table: Actuarial From Actuarial Premium Premium Rating 80 % Advertising 10% 20 Sales 10% 60 20 % The direct operating costs of the departments (including both variable and fixed costs) are: Actuarial Premium rating Advertising Sales $89,000 24,000 69,000 49,000 Required: 1. Determine the total costs of the advertising and sales departments after using the direct method or 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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