Banc CorpTrust Is Considering Either a Bankwide Overhead Rate or Department

question 135

Multiple Choice

Banc Corp.Trust is considering either a bankwide overhead rate or department overhead rates to allocate $396,000 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:
$$\begin{array} { | l | l | l | l | } \hline \text { Department } & \text { DLH } & \text { Loans Processed } & \text { Drect Costs } \\\hline \text { Consumer } & 14,000 & 700 & \$ 280,000 \\\hline \text { Commercial } & 8,000 & 300 & \$ 180,000 \\\hline\end{array}$$
If Banc Corp.Trust uses a bankwide rate based on direct labor hours,what would be the indirect costs allocated to the Consumer Department?

• A) $49,000.
• B) $252,000.
• C) $198,000.
• D) $396,000.

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Definitions:

Consumer Hyperchoice

The condition where consumers are faced with too many choices, leading to decision fatigue, anxiety, and potentially poorer choices.

Rational Perspective

An approach that emphasizes logical, conscious thought processes and decision-making based on information and reasoning.

Consumer Hyperchoice

A situation where consumers face an overwhelming number of product choices, leading to difficulty in making purchase decisions.

Behavioural Influence Perspective

A viewpoint in psychology and marketing emphasizing how external factors, such as social and environmental cues, influence individuals' behaviour and decisions.