Exercise 7-8 Computing and Interpreting Activity Rates [LO3] The operations vice president of First Bank of...

 

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Exercise 7-8 Computing and Interpreting Activity Rates [LO3] The operations vice president of First Bank of Eagle, Kristin Wu, has been interested in investigating the efficiency of the bank's operations. She has been particularly concerned about the costs of handling routine transactions at the bank and would like to compare these costs at the bank's various branches. If the branches with the most efficient operations can be identified, their methods can be studied and then replicated elsewhere. While the bank maintains meticulous records of wages and other costs, there has been no attempt thus far to show how those costs are related to the various services provided by the bank. Ms. Wu has asked your help in conducting an activity- based costing study of bank operations. In particular, she would like to know the cost of opening an account, the cost of processing deposits and withdrawals, and the cost of processing other customer transactions. The Avon branch of First Bank of Eagle has submitted the following cost data for last year: Teller wages Assistant branch manager salary Branch manager salary Total Teller wages Assistant branch manager salary Branch manager salary $ Virtually all of the other costs of the branch-rent, depreciation, utilities, and so on-are organization-sustaining costs that cannot be meaningfully assigned to individual customer transactions such as depositing checks. In addition to the cost data above, the employees of the Avon branch have been interviewed concerning how their time was distributed last year across the activities included in the activity based costing study. The results of those interviews appear below: Activity Opening accounts 149.000 69,000 95,000 313,000 amun Distribution of Resource Consumption Across Activities Processing Deposits and Opening Accounts Withdrawals Processing deposits and withdrawals Processing other customer transactions 0% 9% 0% Activity Cost Pool Opening accounts Processing deposits and withdrawals Processing other customer transactions The manager of the Avon branch of First Bank of Eagle has provided the following data concerning the transactions of the branch during the past year: 71% 16% 0% numu Processing Other Customer Other Transactions Activities 17% 28% 16% S S S Total Activity at the Avon Branch 210 accounts opened 48,500 deposits and withdrawals 1.100 other customer transactions Required: 1. Compute the activity rates for the activity-based costing system. (Round your answers to 2 decimal places. Omit the "$" sign in your response.) Activity Rate 12% 47% 84% Totals 100% 100% 100% per account opened per deposit or withdrawal per other customer transaction Exercise 7-8 Computing and Interpreting Activity Rates [LO3] The operations vice president of First Bank of Eagle, Kristin Wu, has been interested in investigating the efficiency of the bank's operations. She has been particularly concerned about the costs of handling routine transactions at the bank and would like to compare these costs at the bank's various branches. If the branches with the most efficient operations can be identified, their methods can be studied and then replicated elsewhere. While the bank maintains meticulous records of wages and other costs, there has been no attempt thus far to show how those costs are related to the various services provided by the bank. Ms. Wu has asked your help in conducting an activity- based costing study of bank operations. In particular, she would like to know the cost of opening an account, the cost of processing deposits and withdrawals, and the cost of processing other customer transactions. The Avon branch of First Bank of Eagle has submitted the following cost data for last year: Teller wages Assistant branch manager salary Branch manager salary Total Teller wages Assistant branch manager salary Branch manager salary $ Virtually all of the other costs of the branch-rent, depreciation, utilities, and so on-are organization-sustaining costs that cannot be meaningfully assigned to individual customer transactions such as depositing checks. In addition to the cost data above, the employees of the Avon branch have been interviewed concerning how their time was distributed last year across the activities included in the activity based costing study. The results of those interviews appear below: Activity Opening accounts 149.000 69,000 95,000 313,000 amun Distribution of Resource Consumption Across Activities Processing Deposits and Opening Accounts Withdrawals Processing deposits and withdrawals Processing other customer transactions 0% 9% 0% Activity Cost Pool Opening accounts Processing deposits and withdrawals Processing other customer transactions The manager of the Avon branch of First Bank of Eagle has provided the following data concerning the transactions of the branch during the past year: 71% 16% 0% numu Processing Other Customer Other Transactions Activities 17% 28% 16% S S S Total Activity at the Avon Branch 210 accounts opened 48,500 deposits and withdrawals 1.100 other customer transactions Required: 1. Compute the activity rates for the activity-based costing system. (Round your answers to 2 decimal places. Omit the "$" sign in your response.) Activity Rate 12% 47% 84% Totals 100% 100% 100% per account opened per deposit or withdrawal per other customer transaction

Answer rating: 100% (QA)

ANSWER Activity rates Opening accounts 2762 per account P... View the full answer