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 | % | 10 | % | 20 | % | 70 | % | |||
Rating | 20 | % | 0 | % | 30.0 | % | 50.0 | % | |||
The direct operating costs of the departments (including both variable and fixed costs) were as follows:
Actuarial | $ | 80,000 |
Premium Rating | $ | 120,000 |
Marketing | $ | 71,000 |
Sales | $ | 75,000 |
The total cost accumulated in the marketing 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):
$131,408.
$151,588.
$150,918.
$171,657.
$179,236.
Ans: $ 1,31,408
Workings shown below
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