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 shown in the following table To From Actuarial Premium Actuarial Premium Rating Advertising Sales 10% 20 80% 10% 60 20% The direct operating costs of the departments (including both variable and fixed costs) are Actuarial Premium rating 15,000 Advertising Sales $80,000 60,000 40,000
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