Use the Following to Answer Questions

Multiple Choice

Use the following to answer questions:
The Dedham Cooperative Bank is considering either a bank wide overhead rate or departmental overhead rates to allocate $2,000,000 of indirect costs. The bank wide rate would be based on either direct labor hours or the number of loans processed. The departmental rates would be based on direct labor time for Consumer Loans and a dual rate based on direct labor time and the number of loans processed for
Commercial Loans. The following information was gathered for the upcoming period:

-Management estimates that it now costs $2,000 to analyze and close a commercial loan. This amount has been included in the $2,000,000 of indirect costs. If the remaining indirect costs are allocated based on the number of loans processed, how much of the indirect costs should be allocated to the Consumer Department?

A) $960,000
B) $1,040,000
C) $1,600,000
D) $400,000