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Problem 7-41(Algo) Departmental Cost Allocation; Service Company [LO 7-3,7-5] Comprehensive Insurance Company...

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Accounting

Problem 7-41(Algo) Departmental Cost Allocation; Service Company [LO 7-3,7-5]
Comprehensive Insurance Company has two product lines: health insurance and auto insurance. The two product lines are served by
three operating departments, which are necessary for providing the two types of products: claims processing, administration, and
sales. These three operating departments are supported by two departments: information technology and operations. The support
provided by information technology and operations to the other departments is shown below.
The total costs incurred in the five departments are:
Required:
Determine the total costs in each of the three operating departments, after departmental allocations, using (a) the direct method, (b)
the step method (first for information technology going first in the allocation and then for operations going first), and (c) the reciprocal
method. (Do not round intermediate calculations. Round final answers to the nearest dollar.)
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