Provide an Example of How a Bank Achieves Lower Cost

question 74

Essay

Provide an example of how a bank achieves lower cost in making a large loan to a company than could be achieved without the bank.

---

Definitions:

Product Costs

The total costs incurred to create a product, including direct labor, materials, and overhead.

Manufacturing Activities

The set of processes involved in the production of goods, ranging from raw materials handling to the final assembly of products.

Departmental Overhead Rate

A charge rate specific to each department of a company, calculated to allocate indirect costs to products more accurately.

Plantwide Overhead Rate

A single overhead rate calculated by dividing total factory overhead by total direct labor hours or machine hours, applied company-wide.