Comprehensive Insurance Company has two product lines: health insurance and auto insurance. The two product lines are served 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. Support Departments Information technology Operations Operating Departments Information Technology Operations 20% Claims Processing 20% Administration Sales 40% 20% 10% 10 30 The total costs incurred in the five departments are: Information technology Operations Claims processing Administration Sales $ 578,000 1,780,000 290,000 630,000 650,000 Total costs Required: $ 3,928,000 Determine the total costs in each of the three operating departments after departmental allocations, using (a) the direct method. (b
Comprehensive Insurance Company has two product lines: health insurance and auto insurance. The two product lines are served 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. Support Departments Information technology Operations Operating Departments Information Technology Operations 20% Claims Processing 20% Administration Sales 40% 20% 10% 10 30 The total costs incurred in the five departments are: Information technology Operations Claims processing Administration Sales $ 578,000 1,780,000 290,000 630,000 650,000 Total costs Required: $ 3,928,000 Determine the total costs in each of the three operating departments after departmental allocations, using (a) the direct method. (b
Essentials of Business Analytics (MindTap Course List)
2nd Edition
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Chapter3: Data Visualization
Section: Chapter Questions
Problem 23P: Aurora Radiological Services is a health care clinic that provides radiological imaging services...
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Step 1: Define allocations of cost to support department
VIEWStep 2: a. Determine the cost allocated using direct method.
VIEWStep 3: b. 1 Determine the cost allocated using step method for IT
VIEWStep 4: b.2 Determine the costs allocated using step method for operations
VIEWStep 5: c. Estimate the cost using reciprocal method
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