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):

• $102,222.

• $122,402.

• $127,778.

• $142,471.

• $150,050.

Answer 1