PART 1:

The Muskego National Bank is considering either a bankwide overhead rate or department overhead rates to allocate $180,000 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:

Department	DLH	Loans Processed	Direct Costs
Consumer	7,500	300	$104,000
Commercial	5,000	75	$108,000

Management estimates that it costs $300 to analyze and close a commercial loan. This amount has been included in the $180,000 of indirect costs. How much of the $180,000 indirect costs should be allocated to the Commercial Department?

$54,000.

$22,500.

$75,600.

$31,500.

PART 2:

The Muskego National Bank is considering either a bankwide overhead rate or department overhead rates to allocate $300,000 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:

Department	DLH	Loans Processed	Direct Costs
Consumer	7,500	300	$168,000
Commercial	5,000	75	$180,000

If Muskego uses a bankwide rate based on the number of loans processed, what would be the total costs for the Consumer Department?

$240,000.

$180,000.

$408,000.

$60,000.

PART 3:

The Muskego National Bank is considering either a bankwide overhead rate or department overhead rates to allocate $75,000 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:

Department	DLH	Loans Processed	Direct Costs
Consumer	9,000	400	$48,000
Commercial	6,000	100	$45,000

If Muskego uses a bankwide rate based on the number of loans processed, what would be the total costs for the Commercial Department?

$60,000.

$45,000.

$15,000.

$75,000.