Question
Banc Corp. Trust is considering either a bankwide overhead rate or department overhead rates to allocate $340,000 of indirect costs. The bankwide rate could be
Banc Corp. Trust is considering either a bankwide overhead rate or department overhead rates to allocate $340,000 of indirect costs. The bankwide rate could be basedon 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 ratebased on direct labor hours and the number of loans processed for Commercial Loans. The following information was gathered for the upcoming period:
DepartmentDLHLoans ProcessedDirect Costs
Consumer12,000800$270,000
Commercial8,000200$ 170,000
Banc Corp. Trust estimates that it costs $400 to analyze and close a commercial loan. What is the overhead rate if Banc Corp. Trust allocates the remaining indirect costsusing direct labor hours?
$1,000 per loan.
$17.00 per hour.
$13.00 per hour.
$1,000 per loan.
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