Northwestern Bank (NB) offers only checking accounts. Customers can write checks and use a network of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Northwestern Bank (NB) offers only checking accounts. Customers can write checks and use a network of automated teller machines. NB earns revenue by investing the money deposited; currently, it averages 4.1 percent annually on its investments of those deposits. To compete with larger banks, NB pays depositors 0.3 percent on all deposits. A recent study classified the bank's annual operating costs into four activities. Activity Using ATM Visiting branch Processing transactions Managing functions Total overhead Cost Driver Number of uses Number of visits Cost $ 1,800,000 1,080,000 7,920,000 7,200,000 Number of transactions Total deposits $ 18,000,000 Data on two representative customers follow. Driver Volume 3,000,000 uses 225,000 visits 120,000,000 transactions $ 562,500,000 in deposits ATM uses Branch visits Number of transactions Average deposit Required: Emily Jacob 40 130 5 200 45 520 $ 10,000 $ 10,000 a. Compute the operating profit for Northwestern Bank. b. Compute the profit from Emily and Jacob, assuming that customer costs are based only on deposits. Interest costs = 0.3 percent of deposits; operating costs are 3.2 percent (= $18,000,000/$562,500,000) of deposits. c. Compute the profit from Emily and Jacob, assuming that customer costs are computed using the information in the activity-based costing analysis. Northwestern Bank (NB) offers only checking accounts. Customers can write checks and use a network of automated teller machines. NB earns revenue by investing the money deposited; currently, it averages 4.1 percent annually on its investments of those deposits. To compete with larger banks, NB pays depositors 0.3 percent on all deposits. A recent study classified the bank's annual operating costs into four activities. Activity Using ATM Visiting branch Processing transactions Managing functions Total overhead Cost Driver Number of uses Number of visits Cost $ 1,800,000 1,080,000 7,920,000 7,200,000 Number of transactions Total deposits $ 18,000,000 Data on two representative customers follow. Driver Volume 3,000,000 uses 225,000 visits 120,000,000 transactions $ 562,500,000 in deposits ATM uses Branch visits Number of transactions Average deposit Required: Emily Jacob 40 130 5 200 45 520 $ 10,000 $ 10,000 a. Compute the operating profit for Northwestern Bank. b. Compute the profit from Emily and Jacob, assuming that customer costs are based only on deposits. Interest costs = 0.3 percent of deposits; operating costs are 3.2 percent (= $18,000,000/$562,500,000) of deposits. c. Compute the profit from Emily and Jacob, assuming that customer costs are computed using the information in the activity-based costing analysis.
Expert Answer:
Related Book For
Posted Date:
Students also viewed these accounting questions
-
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;...
-
Northwestern Bank (NB) offers only checking accounts. Customers can write checks and use a network of automated teller machines. NB earns revenue by investing the money deposited; currently, it...
-
Part A: The following departments of activities are recorded in the City of Atlantas Comprehensive Annual Financial Report in the appendix to this chapter. Indicate the type of fund that most likely...
-
It has been three years since Dr. Julia Barr opened Creature Care Animal Clinic, a suburban veterinary clinic. Dr. Barr thought that by now she would be enjoying having her own practice. She had...
-
The design characteristics of a gear-reduction unit are under review. Gear B is rotating clockwise with a speed of 300 rev/min when a torque is applied to gear A at time t = 2 s to give gear A a...
-
Tyler Company reported the following costs on its financial statements (in thousands): REQUIRED: Using the reserve disclosure for Tyler Company in problem 13 and the data presented in this problem,...
-
You are doing a review services and related tax work engagement for Murphy Construction Company. You have made extensive inquiries of management about their financial statements and have concluded...
-
1 Problem 4 - A firm's optimal output choice (10 points) Consider a price taking firm, where the market price for the output is given by P. The firm's output choice is denote by Q. The firm has a...
-
In May Joseph Laval was appointed managing director of the FrenchThai joint venture mobile telephony company Siammobile. The personnel in the joint venture were people who had transferred from the...
-
How can multilateral funds improve the support of a green and resilient development policy in emerging economies?
-
Electric vehicle (EV) reliability problems are frequently reported by drivers; however, for the first time, the rate of EV problems is lower than the rate of non-EV problems. Are urban areas prepared...
-
Due to climate change it is necessary to improve research skills and firm-level innovation in the agriculture sector. Discuss the experience that occurred in Carmens internship.
-
How much control should the HR department possess in a business/company?
-
We are studying the earthquake energy that the villages near the earthquake center can receive. There are many villages located along the line with minimum -1 and maximum +2 kilometers away from the...
-
In Exercises 15 through 30, find the derivative dy/dx. In some of these problems, you may need to use implicit differentiation or logarithmic differentiation. y ex + et -2x 1 + e
-
Elmira Tool and Die makes machine tools to order. The following transactions occurred in October: 1. Issued $2,800 of supplies from the materials inventory. 2. Purchased $42,000 of materials. 3....
-
Lillibridge & Friends, Inc. provides you with the following data for its single product: Required Give the amounts for each of the following: a. Prime cost per unit. b. Contribution margin per unit....
-
Ellery Products manufactures various components for the fashion industry. Ellery buys fabric from two vendors: Ewers Textiles and Bramford Materials. Ellery chooses the vendor based on price. Once...
-
Please list possible definitions of the term embedded system!
-
How would you define the term cyber-physical system (CPS)? Do you see any difference between the terms embedded systems and cyber-physical systems?
-
What is the Internet of Things (IoT)?
Study smarter with the SolutionInn App