t is considering elther a bankwide overhead rate or department overhead rates to

Question

t is considering elther a bankwide overhead rate or department overhead rates to allocate $357.000 of indirect costs The hankwide rate could be based on either drect labor hourts (DH tmental rotes would be bosed on direct loabor hours for Consumerloons and a dual rate bosed on direct labor hours and the number of loons processed for Direct C Consumer Commercia 5,000 5.000 300 $240 Banc Corp Trust estimates that in costs $400 to analyze and close a commierca loan What s the overhiead ate t Bane Corp Trust allocates the remaining indirect costs using direct labor hours? $800 per loan O $1700 per hour O $1129 per hour O $1000 per loan

Explanation / Answer

Total indirect costs = 357000

Less: cost of Analyze and close of commercial loan = 300 * 400 = 120000

Remain indirect costs = 237000

Overhead allocation rate = 237000 / (15000 + 6000) = 237000 / 21000 = $11.29 per hour

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