Question

The Long Term Care Plus Company has two service departments — actuarial and premium rating, and two operations 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%	40%	20%	40%
Rating	25%	0%	37.5%	37.5%

The direct operating costs of the departments (including both variable and fixed costs) were as follows:

Actuarial	$60,000
Premium Rating	$40,000
Marketing	$60,000
Sales	$70,000

The total cost accumulated in the sales department using the reciprocal method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

Answer 1

		actuarial	Rating	marketing	sales
Direct operating cost		60000	40000	60000	70000
Distribution of cost
acturial		-60000	24000	12000	24000
rating		16000	-64000	24000	24000
acturial		-16000	6400	3200	6400
rating		1600	-6400	2400	2400
acturial		-1600	640	320	640
rating		160	-640	240	240
acturial		-160	64	32	64
rating		16	-64	24	24
acturial		-16	6	3	6
rating		2	-6	2	2
acturial		-2	1	0	1
rating		0	-1	1	0
total accumulated cost		0	0	102222	127777
total accumulated cost of sale department is $127777