HomeLife Life Insurance Company has two service departments…
HomeLife Life Insurance Company has two service departments (actuarial and premium rating) and two production departments (advertising and sales). The distribution of each service department’s efforts (in percentages) to the other departments is as follows:From:ActuarialPremium RatingAdvertisingSalesActuarial-80%10%10%Premium Rating20%-20%60%The direct operating costs of the departments (including both variable and fixed costs) are:Actuarial$80,000Premium Rating15,000Advertising60,000Sales40,000Using the direct method, determines total service cost allocated to the advertising department _______________