Question: 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

 Rock Solid Bank and Trust (RSB&T) offers only checking accounts. Customers

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 5.30 percent annually on its Investments of those deposits. To compete with larger banks, RSB&T pays depositors 0.50 percent on all deposits. A recent study classified the bank's annual operating costs Into four activities. Activity Cost Driver Using ATM Number of uses visiting branch Number of visits Processing Number of transaction transactions Managing functions Total deposits Total overhead Cost Driver Volume $ 1,650, eee 2,200,000 uses 990, eee 165,000 visits 7,260, eee 88,000,000 transactions 6,600,000 $412,500,000 in deposits $16,500, eee Data on two representative customers follow. ATM uses Branch visits Number of transactions Average deposit Customer A Customer B 100 200 5 2e 40 1,500 $6,000 $6,000 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 = 0.50 percent of deposits, operating costs are 4 percent = $16,500,000/$412,500,000) 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 costing analysis. Complete this question by entering your answers in the tabs below. Required A Required B Required c Compute RSB&T's operating profits. Operating profit RE Required B)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!