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

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

Actuarial                           —                                  80%                            10%                         10%

The direct operating costs of the departments (including both variable and fixed costs) are:

Actuarial               \$99,000

Sales                       59,000

Required:

1.Determine the total cost allocated to the advertising and sales departments using the direct method

Total Cost Allocated

Sales Department

2.Determine the total cost allocated to advertising and sales using the step method.

Total Cost Allocated

Sales Department

3.Determine the total cost allocated to advertising and sales using the reciprocal method. (Round your intermediate calculations to the nearest whole dollar and final answers to 2 decimal places.)

Total Cost Allocated