The Muskego National Bank is considering either a bankwide overhead rate or department overhead rates to allocate $250,000 of overhead 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 Don't use plagiarized sources. Get Your Custom Essay on cost allocation 424902 Get an essay WRITTEN FOR YOU, Plagiarism free, and by an EXPERT! Just from $10/Page | DLH | Loans Processed | Direct Costs |
| Consumer | 9,000 | 400 | $200,000 |
| Commercial | 6,000 | 100 | $150,000 |
If Muskego uses a bankwide rate based on direct labor hours, what would be the overhead costs allocated to the Consumer Department?
Answer
| $100,000 | ||
| $150,000 | ||
| $250,000 | ||
| $350,000 |
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