Departmental Cost Allocation HomeLife Life Insurance Company has two service departments (actuarial and premium rating) and two production departments (advertising and sales). The distribution of each...

Departmental Cost 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

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.