Exercise 7-28 (Algo) Departmental Cost Allocation [LO 7-3, 7-5] 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: From Actuarial Premium Actuarial 20% Actuarial Premium rating Advertising Sales To Premium Rating Advertising Sales 80% 10% 10% 20 60 The direct operating costs of the departments (including both variable and fixed costs) are: $ 95,000 30,000 75,000 55,000 Required: 1. Determine the total costs of the advertising and sales departments after using the direct method of 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.

Exercise 7-28 (Algo) Departmental Cost Allocation [LO 7-3, 7-5] 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: From Actuarial Premium Actuarial 20% Actuarial Premium rating Advertising Sales To Premium Rating Advertising Sales 80% 10% 10% 20 60 The direct operating costs of the departments (including both variable and fixed costs) are: $ 95,000 30,000 75,000 55,000 Required: 1. Determine the total costs of the advertising and sales departments after using the direct method of 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.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...

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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: To From Actuarial Premium Rating Advertising Sales Actuarial — 80 % 10 % 10 % Premium 20 % — 20 60 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 Required: 3. Determine the total costs of the advertising and sales departments after using the reciprocal method of allocation.
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 From Actuarial Premium Rating Advertising Sales Actuarial — 80% 10 % 10 % Premium 20% — 20 60 The direct operating costs of the departments (including both variable and fixed costs) are: Actuarial $ 80,000 Premium rating 15,000 Advertising 60,000 Sales 40,000 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. What is the…
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 From Actuarial Premium 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 1. Determine the total costs of the advertising and sales departments after using the reciprocal method of allocation.
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. Operating Departments Information technology Operations 10% The total costs incurred in the five departments are: Information technology Operations Clains processing Administration Sales Total costs Support Departments Information Technology Operations 20% Direct Method b. Step Method (Info Tech First) Step Method (Operations First) e Reciprocal Method $ 558,000 1,730,000 250,000 599,000 650,000 $3,787,000 Required: Determine the total costs…
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 From Actuarial Premium Rating Advertising Sales Actuarial - 70% 15% 15% Premium 20% 20 60 The direct operating costs of the departments (including both variable and fixed costs) are: Actuarial $81,000 Premium rating 16, 000 Advertising 61, 000 Sales 41, 000 Required: 1. Determine the total costs of the advertising and sales departments after using the direct method of 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.
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 From Actuarial Premium 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 $ 91,000 Premium rating 26,000 Advertising 71,000 Sales 51,000 Required: 3. Determine the total costs of the advertising and sales departments after using the reciprocal method of allocation.
S HomeLife Life Insurance Company has two service departments (actuarial and premium rating) and two production departments fadvertising and sales). The distribution of each service department's efforts (in percentages) to the other departments is shown in the following table: From Actuarial Premium Actuarial Premium rating Advertising Sales Actuarial 25% The direct operating costs of the departments (including both variable and fixed costs) are: Premium Rating Advertising 80% 10% 15 Required 1 Required 2 To $ 82,000 17,000 62,000 42,000 Advertising department Sales department Required: 1. Determine the total costs of the advertising and sales departments after using the direct method of 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. Complete this question by entering your answers in the tabs…
7-29 Departmental Cost Allocation HomeLife Life Insurance Company has two service departments (actuarial and premium rating) and two production departments (advertising and sales). The distribu- tion of each service department's efforts (in percentages) to the other departments is To From Actuarial Premium Rating Advertising 10% 20% Sales 10% 60% Actuarial 80% Premium 20% The direct operating costs of the departments (including both variable and fixed costs) are Actuarial Premium rating Advertising Sales $80,000 15,000 60,000 40,000 Required 1. Determine the total cost allocated to the advertising and sales departments using the direct method. 2. Determine the total cost allocated to advertising and sales using the step method. 3. Determine the total cost allocated to advertising and sales using the reciprocal method.
Problem 4-26A (Algo) Allocating service center costs-step method and direct method LO 4-6 Walton Information Services, Ic., has two service departments: human resources and billing. Walton's operating departments, organized according to the special industry each department serves, are health care, retail, and legal services. The billing department supports only the three operating departments, but the human resources department supports all operating departments and the billing department. Other relevant information follows. Human Legal Resources Billing Health Care Retail Services Number of employees 20 50 207 157 86 $ 6,170,000 $10,700,000 Annual cost* $900,000 $2,110,000 $4,970,000 $5,350,000 $2,970,000 $3,950,000 Annual revenue *This is the operating cost before allocating service department costs. Required a. Allocate service department costs to operating departments, assuming that Walton adopts the step method. The company uses the number of employees as the base for allocating…
Solomon Information Services, Incorporated, has two service departments: human resources and billing. Solomon's operating departments, organized according to the special Industry each department serves, are health care, retall, and legal services. The billing department supports only the three operating departments, but the human resources department supports all operating departments and the billing department. Other relevant information follows. Number of employees Annual cost Annual revenue Req A1 Human Resources Department Reg A2 Billing Health Care Retail Legal Services Total *This is the operating cost before allocating service department costs. Allocation Rate 20 Req B1 $ 900,000 Complete this question by entering your answers in the tabs below. x X Billing Required a. Allocate service department costs to operating departments, assuming that Solomon adopts the step method. The company uses the number of employees as the base for allocating human resources department costs and…
please answer within the format by providing formula the detailed workingPlease provide answer in text (Without image)Please provide answer in text (Without image)Please provide answer in text (Without image) Robinson Products Company has two service departments (S1 and S2) and two production departments (P1 and P2). The distribution of each service department’s efforts (in percentages) to the other departments is: From To S1 S2 P1 P2 S1 — 10% 20% ?% S2 10% — ? 30 The direct operating costs of the departments (including both variable and fixed costs) are: S1 $ 180,000 S2 60,000 P1 50,000 P2 120,000 Required: 1. Determine the total cost of P1 and P2 using the direct method. 2. Determine the total cost of P1 and P2 using the step method. 3. Determine the total cost of P1 and P2 using the reciprocal method.
View Policies Current Attempt in Progress Blossom's Medical operates three support departments and two operating units, Surgery and ER. The support departments are allocated based on the hours used. The cost of operating the accounting (acct), administration (admin), and human resources (HR) departments is $274500, $164700, and $66000, respectively. Information on the hours used are as follows: Acct Admin HR Surgery ER Hours in Acct 20 48 360 220 Hours in Admin 16 8 120 80 Hours in HR 8 4 65 130 What amount of costs would be allocated from the HR department to the other support departments (Acct and Admin) using the reciprocal method to allocate costs? (Do not round the intermediate calculations.) $5438. $0. $7203. $6894. eTextbook and Media