Comprehensive Insurance Company has three operating departments: claims processing, administration, and sales. These three operating departments...

Transcribed Image Text:

Comprehensive Insurance Company has three operating departments: claims processing, administration, and sales. These three operating departments are supported by two service departments: information technology and accounting. The support provided by information technology and accounting to the other departments is shown below. Information technology Accounting The total costs incurred in the five departments are: Information technology Accounting Claims processing Administration Sales Total costs Service Departments Information Technology Operating Departments Claims Accounting Processing 20% 20% 10% 10 Administration Sales 40% 20% 50 30 $560,000 1,730,000 250,000 599,000 650,000 $3,789,000 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 accounting going first), and (c) the reciprocal method. (Do not round intermediate calculations. Round final answers to the nearest dollar.) a. Direct Method b. Step Method (Info Tech First) Step Method (Accounting First) c. Reciprocal Method Operating Departments Claims Processing Administration Sales Total Comprehensive Insurance Company has three operating departments: claims processing, administration, and sales. These three operating departments are supported by two service departments: information technology and accounting. The support provided by information technology and accounting to the other departments is shown below. Information technology Accounting The total costs incurred in the five departments are: Information technology Accounting Claims processing Administration Sales Total costs Service Departments Information Technology Operating Departments Claims Accounting Processing 20% 20% 10% 10 Administration Sales 40% 20% 50 30 $560,000 1,730,000 250,000 599,000 650,000 $3,789,000 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 accounting going first), and (c) the reciprocal method. (Do not round intermediate calculations. Round final answers to the nearest dollar.) a. Direct Method b. Step Method (Info Tech First) Step Method (Accounting First) c. Reciprocal Method Operating Departments Claims Processing Administration Sales Total

Answer rating: 100% (QA)

To determine the total costs in each of the three operating departments using the direct method step method and reciprocal method we need to allocate the costs from the service departments to the oper... View the full answer