Chapter 4 BEX BEX.04.07

Simplifying the ABC System: TDABC Golding Bank provided the following data about its resources and activities for its checking account process: Time per Unit Traditional of Activity Account Interest-Bearing Account Resources Activities Driver Supervision No. of accounts 2,000 1,000 $70,000 Processing accounts 90,000 Issuing statements 0.20 hr. 0.10 hr. Phone and supplies No. of statements 60,000 10,000 Salaries 275,000 Processing transactions No. of transactions 0.05 hr. 160,000 120,000 Computer 25,000 Answering customer inquiries No. of inquiries 0.15 hr. 1,500 1,500 Total $460,000 At practical capacity, Golding uses 25,000 check processing hours. Required: 1. Calculate the capacity cost rate for the checking account process. Round your answers to the nearest cent. 18.4 per hour Calculate the activity rates for the four activities. Round your answers to the nearest cent. Processing accounts $ 3.68 per account Issuing statements $ Processing transactions $ 1.84 per statement 0.92 per transaction 2.76 per Inquiry Answering inquiries $ 2. Assuming there are 2,000 interest-bearing checking accounts, calculate the cost per account using the activity rates from Requirement 1. Round your answers to the nearest cent. Unit cost $ 3.68 X x 3. A time equation is used to assign resource costs to checking accounts. Select a time equation for the interest-bearing checking account product. 0.20(number of accounts) + 0.10(number of statements) + 0.05(number of transactions) + 0.15(number of inquiries) Again, assuming that there are 2,000 interest bearing accounts, show that the resource cost per account is the same as calculated in Requirement 2. Round your answers to the nearest cent. 3.68 X