Banc Corporation Trust is considering either a bank-wide overhead rate or department overhead rates to allocate $396,000 of indirect costs. The bank-wide rate could be based on either direct labor-hours (DLH) or the number of loans processed. The departmental rates would be based on direct labor-hours for Consumer Loans and a dual rate based on direct labor-hours and the number of loans processed for Commercial Loans. The following information was gathered for the upcoming period: Direct Costs Loans Processed 700 300 $ 280,000 $ 180,000 If Banc Corporation Trust uses a bank-wide rate based on direct labor-hours, what would be the indirect costs allocated to the Commercial Department? Department Consumer Commercial Multiple Choice $144,000 $138,000 $180,000 DLH 14,000 8,000
Banc Corporation Trust is considering either a bank-wide overhead rate or department overhead rates to allocate $396,000 of indirect costs. The bank-wide rate could be based on either direct labor-hours (DLH) or the number of loans processed. The departmental rates would be based on direct labor-hours for Consumer Loans and a dual rate based on direct labor-hours and the number of loans processed for Commercial Loans. The following information was gathered for the upcoming period: Direct Costs Loans Processed 700 300 $ 280,000 $ 180,000 If Banc Corporation Trust uses a bank-wide rate based on direct labor-hours, what would be the indirect costs allocated to the Commercial Department? Department Consumer Commercial Multiple Choice $144,000 $138,000 $180,000 DLH 14,000 8,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Banc Corporation Trust is considering either a bank-wide overhead rate or department overhead rates to allocate $396,000 of indirect costs. The bank-wide rate could be based on either direct labor-hours (DLH) or the number of loans processed. The
departmental rates would be based on direct labor-hours for Consumer Loans and a dual rate based on direct labor-hours and the number of loans processed for Commercial Loans. The following information was gathered for the upcoming period:
Department
Consumer
Commercial
Multiple Choice
$144,000
If Banc Corporation Trust uses a bank-wide rate based on direct labor-hours, what would be the indirect costs allocated to the Commercial Department?
$138,000
$180,000
DLH
14,000
8,000
$148,500
Loans
Processed
700
300
Direct
Costs
$ 280,000
$ 180,000
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