Banc Corporation Trust is considering either a bank-wide overhead rate or department overhead rates to...
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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
DLH
Loans Processed
Direct Costs
Consumer
14,000
700
$ 280,000
Commercial
8,000
300
$ 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 Consumer Department?
Multiple Choice
$49,000
$252,000
$198,000
$396,000
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