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The Dedham Cooperative Bank is considering either a bank wide overhead rate or departmental overhead rates to allocate $2,000,000 of indirect costs. The bank wide rate would be based on either direct labor hours or the number of loans processed. The departmental rates would be based on direct labor time for Consumer Loans and a dual rate based on direct labor time and the number of loans processed for
Commercial Loans. The following information was gathered for the upcoming period:

-If Dedham Cooperative uses a bank wide rate based on the number of loans processed, what would be the indirect costs assigned to the Commercial Department?
A) $400,000
B) $600,000
C) $800,000
D) $200,000

Question

Use the following to answer questions:
The Dedham Cooperative Bank is considering either a bank wide overhead rate or departmental overhead rates to allocate $2,000,000 of indirect costs. The bank wide rate would be based on either direct labor hours or the number of loans processed. The departmental rates would be based on direct labor time for Consumer Loans and a dual rate based on direct labor time and the number of loans processed for
Commercial Loans. The following information was gathered for the upcoming period:
 
-If Dedham Cooperative uses a bank wide rate based on the number of loans processed, what would be the indirect costs assigned to the Commercial Department?
A) $400,000 
B) $600,000 
C) $800,000 
D) $200,000

Quizplus · Accepted Answer

The indirect costs assigned to the Commercial Department would be $400,000 because the bank wide rate is based on the number of loans processed, and the Commercial Department processed 200 loans.

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