Question

banc corp. trust is considering either a bankwide overhead rate or department overhead rates to allocate $272,000 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 11,000 800 $ 240,000 commercial 6,000 250 $ 120,000 if banc corp. trust uses a bankwide rate based on direct labor hours, what would be the indirect costs allocated to the commercial department?

Answer 1

$96,000 would be the indirect costs allocated to the commercial department.

These include expenses linked to many projects and expenses unrelated to the project's actual construction. Examples of typical indirect project costs include payroll taxes, employee benefits, workers' compensation insurance, general liability insurance, and equipment fuel and maintenance.

What is DLH?

indirect expenses are accounting, auditing, and legal fees, as well as business permits, office expenses, rent, supervisor salaries, telephone expense, and utilities. Indirect expenses may or may not be allocated.

Following is how the price per unit is calculated: Divide $272,000 by 17,000 direct labor hours to get $16.

17,000 direct work hours were contributed by both consumers and enterprises in total (11,000 + 6,000).

Currently, the indirect cost per unit is $96,000, or about 16,600 hours of commercial direct labor.

The amount of direct labor hours required to create one unit of a product is known as the direct labor hours. By dividing the total number of finished items by the total amount of direct labor hours required to produce them, the figure is obtained.

To learn more about  DLH refer to:

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