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

                                                                          Premium                    

From                            Actuarial                          Rating                      Advertising                 Sales

Actuarial                           —                                  80%                            10%                         10%                                                        

Premium                         25%                                 —                               15                            60  

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

Actuarial               $99,000   

Premium rating       34,000   

Advertising              79,000   

Sales                       59,000 

Required:

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

                                                       Total Cost Allocated

Advertising Department

Sales Department

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

                                                       Total Cost Allocated

Advertising Department

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

Advertising Department

Sales Department

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