Schneider Bank offers two primary financial services: commercial checking and credit cards. The bank also generates some
Question:
To account for revenues from the identity theft insurance, management reduces Cost of Services Rendered for primary services. The commissions are accounted for on a realized value basis as the policies are received. For June, separate costs for commercial checking accounts and credit cards were $ 850,000 and 380,000, respectively.
a. Allocate the joint cost.
b. Determine the income for each primary service and the companys overall gross margin for June.
c. Assume instead that Schneider Bank uses the net realizable value approach for by-product revenue. How much joint cost would have been allocated to the commercial checking and the credit card products during June? Will the gross margin be the same as in (b)? Why or whynot?
Step by Step Answer:
Cost Accounting Foundations and Evolutions
ISBN: 978-1111971724
9th edition
Authors: Michael R. Kinney, Cecily A. Raiborn