The Bank you work at has a product profitability system. The head of the Trust Department says:
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Question:
The Bank you work at has a product profitability system. The head of the Trust Department says:
1. The Trust department brings in large amounts of deposits the commercial lending department can then loan out at a huge profit. We should get earnings credits for that.
2. Why do I have to absorb some of the corporate overhead? The Trust Department has very little to do with the rest of the bank.
Evaluate the Trust Department Managers comments. How will this impact the product profitability system? If you do want to give the Trust Department earnings credit how will that affect the Commercial Loan Departments profitability, if any? Is the Trust Department correct about the overhead allocation?
Expert Answer:
1 Investment in a built environment represents shortterm costs that return only benefits on longterm use of the property Therefore costs occur prior to profits and facility owners should receive resou... View the full answer
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