Citizens Bank’s start-up division establishes new branch banks. Each branch opens with three tellers. Total teller cost per branch is \($80,000\) per year. The three tellers combined can process up to 80,000 customer transactions per year. If a branch does not attain a volume of at least 50,000 transactions dur¬ ing its first year of operations, it is closed. If the demand for services exceeds 80,000 transactions, an additional teller is hired, and the branch is transferred from the start-up division to regular operations.

Required:

a. What is the relevant range of activity for new branch banks?

b. Determine the amount of teller cost in total and the teller cost per transaction for a branch that processes 50,000, 60,000, 70,000, or 80,000 transactions. In this case (the activity base is the number of transactions for a specific branch), is the teller cost a fixed or a variable cost?

c. Determine the amount of teller cost in total and the teller cost per branch for Citizens Bank, assuming that the start-up division operates 10, 15, 20, or 25 branches. In this case (the activity base is the number of branches), is the teller cost a fixed or a variable cost?