The Long Term Care Plus Company has two service departments — actuarial and prem

Question

The Long Term Care Plus Company has two service departments — actuarial and premium rating, and two production departments — marketing and sales. The distribution of each service department's efforts to the other departments is shown below: FROM TO Actuarial Rating Marketing Sales    Actuarial 0.0% 50.0% 20.0% 30.0% Rating 29.0% 0.0% 43.7% 27.3% The direct operating costs of the departments (including both variable and fixed costs) were as follows: Actuarial $69,000 Rating $46,000 Marketing $70,000 Sales $81,000 The total cost accumulated in the marketing department using the step method is:   The Long Term Care Plus Company has two service departments — actuarial and premium rating, and two production departments — marketing and sales. The distribution of each service department's efforts to the other departments is shown below: FROM TO Actuarial Rating Marketing Sales    Actuarial 0.0% 50.0% 20.0% 30.0% Rating 29.0% 0.0% 43.7% 27.3% The direct operating costs of the departments (including both variable and fixed costs) were as follows: Actuarial $69,000 Rating $46,000 Marketing $70,000 Sales $81,000 The total cost accumulated in the marketing department using the step method is:  

Explanation / Answer

The total cost accumulated in the marketing department using the step method is:

Direct Operating cost of Machining Dept. $ 70,000

Attributable Direct cost of service Dept.

- Acturial (59000*20%) $ 11,800

- Rating (46000* 43.7%) $ 20,102

Total Accumulated cost $ 1,01,902

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