Rock Solid Bank and Trust (RSB&T) offers only checking accounts. Customers can write checks and use a network of automated teller machines. RSB&T earns revenue by investing the money deposited; currently, it averages 5.2 percent annually on its investments of those deposits. To compete with larger banks, RSB&T pays depositors 0.5 percent on all deposits. A recent study classified the bank's annual operating costs into four activities:

Data on two representative customers follow:

Required
a. Compute RSB&T's operating profits.
b. Compute the profit from Customer A and Customer B, assuming that customer costs are based only on deposits. Interest costs = 0.5 percent of deposits; operating costs are 4 percent (= $7,500,000/$187,500,000) of deposits.
c. Compute the profit from Customer A and Customer B, assuming that customer costs are computed using the information in the activity-based costinganalysis.

Activity Cost Driver Cost Driver Volume Using ATM Visiting branch Processing transaction. Number of transactions 1,500,000 Managing functions.. Total deposits Number of uses 750,000 10,000,000 uses Number of visits 2,250,000 750,000 visits 40,000,000 transactions $187,500,000 in deposits 3,000,000 $7,500,000 Total overhead Customer A Customer B ATM uses Branch visits Number of transactions. Average deposit.... 200 260 20 1,500 $6,000 40 $200