The Muskego National Bank is considering either a bankwide overhead rate or depa

Question

The Muskego National Bank is considering either a bankwide overhead rate or department overhead rates to allocate $315,000 of indirect costs. The bankwide 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:

If Muskego uses a bankwide rate based on direct labor hours, what would be the indirect costs allocated to the Commercial Department?

$189,000.

$126,000.

$315,000.

$441,000.

The Muskego National Bank is considering either a bankwide overhead rate or department overhead rates to allocate $315,000 of indirect costs. The bankwide 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:

Explanation / Answer

$126,000

Bankwide rate based on direct labour hours = $315,000 / 15,000 DLH = $21

Indirect cost allocated to commercial department = $21 * 6000 DLH = $126,000

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.