# Homelife life insurance company has two service departments

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 percentges) to the other departments is
To
Actuarial                                              80%                                        10%                                        10%
The direct operating costs of the departments (including both variable and fixed costs) are
Actuarial                              \$80,000
Sales                                        40,000
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.

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