Answer:
The Mega-Bank
The amount allocated to the Commercial Department is:
= $324,810.
Explanation:
a) Data and Calculations:
Indirect costs = $410,000
Department DLH Loans Processed Direct Costs
Consumer 16,000 650 $350,000
Commercial 7,000 400 $250,000
Total 23,000 1,050 $600,000
Allocation Bases:
Bankwide rates:
DLH = $410,000/23,000 = $17.83
Loans processed = $410,000/1,050 = $390.48
Commercial Department Allocated Costs:
Cost to process loans = $500 * 400 = $200,000
Cost based on DLH = $17.83 * 7,000 = 124,810
Total costs = $324,810
