Computing and Interpreting Activity Rates LO7–3

(This exercise is a continuation of Exercise 7–7; it should be assigned only if Exercise 7–7 also is assigned.) The manager of the Westfield branch of Security Home Bank has provided the following data concerning the transactions of the branch during the past year:

Activity Total Activity at the Westfield Branch Opening accounts ��������������������������������������������� 500 new accounts opened Processing deposits and withdrawals ����������� 100,000 deposits and withdrawals processed Processing other customer transactions ������� 5,000 other customer transactions processed The lowest costs reported by other branches for these activities are displayed below:

Activity Lowest Cost among All Security Home Bank Branches Opening accounts ����������������������������������������������������������� $26.75 per new account Processing deposits and withdrawals ������������������������� $1.24 per deposit or withdrawal Processing other customer transactions ��������������������� $11.86 per other customer transaction Required:
1. Using the first-stage allocation from Exercise 7–7 and the above data, compute the activity rates for the activity-based costing system. (Use Exhibit 7–7 as a guide.) Round all computations to the nearest whole cent.
2. What do these results suggest to you concerning operations at the Westfield branch?