Reto Bank is a local bank located in a residential area and it services mostly individuals and local businesses. Reto’s four main services are transaction processing (withdrawals, cheques, currency exchange), loans, simple investments (individual clients) and complex investments (portfolios of large businesses). To support these activities, Reto employs 10 front-office staff, 12 back-office staff dealing with loan applications and investments and 2 people to consult with customers and manage complex portfolio investments. A team of 3 supervisors manages the overall operations of the bank. As part of Reto’s implementation of activity-based costing, it needed to identify activities, resources and cost drivers. The following table summarizes the cost-allocation bases Reto has chosen for its activities and resources:

For each of the brief descriptions that follows, indicate whether it is an activity:(A) or a resource (R). For each activity or resource, choose the most appropriate cost-allocation base from the preceding list and indicate for each resource whether it is a fixed-cost (F) or variable cost (V) resource. The first item is completed as a guide.

(a). Contract maintenance of building (R; number of square metres; F).

(b). Staff for front-line customer service.

(c). External computing services.

(d). Development of repayment schedules.

(e). Staff for consulting with customers and arranging the portfolios.

(f). External service bureau providing customer credit checks for loan applications.

(g). Preparing investment documents for customers.

(h). Research to evaluate a loan application.

(i). Overtime by back-office staff.

(j). Telephones/facsimile.

(k). Staff for service and background research.

(l). Establish customer collateral for approved loans.

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Cost-allocation base number of investments number of applications number of loans number of person hours number of minutes number of computer transactions number of square metres number of loan inquiries number of transactions number of schedules number of securities