The College Credit Union (CCU) has engaged your services to determine the cost of its various activities.
Question:
The College Credit Union (CCU) has engaged your services to determine the cost of its various activities. The following data are available for a representative branch.
Process Deposits | Process Checks | Balance Inquiries | Branch Visits | Total Cost | |
Tellers | 30% | 40% | 10% | 20% | $150,000 |
Assistant Manager | 10% | 10% | 5% | 75% | $75,000 |
Managers | 2% | 3% | 5% | 90% | $90,000 |
The average branch processes 60,000 deposits and 125,000 check transactions each year and 232,500 balance enquiries and 3,345 branch visits each year.
CCU has also collected the following information about 4 specific customers for the year:
Customer | Process Deposits | Process Checks | Balance Inquiries | Branch Visits |
Axel | 8,000 | 15,000 | 20,000 | 10 |
Brad | 2,000 | 4,000 | 24,000 | 18 |
Chad | 15,000 | 20,000 | 35,000 | 20 |
Dad | 25,000 | 35,000 | 50,000 | 35 |
Compute Total Profit for customers A, B, C, and D after allocating the cost of their activities. Please use the budgeted rates for cost allocations
Axel | Brad | Chad | Dad | |
Sales Dollars | 50,000 | 45,000 | 45,000 | 30,000 |
Activity Costs: | ||||
Process Deposits: | ||||
Process Checks: | ||||
Balance Inquiries: | ||||
Branch Visits: | ||||
Total Cost: | ||||
Total Profit: |
Should CCU drop any of the customers Axel, Brad, Chad, Dad? Why or why not? List two factors should they consider before making the decision?
Managerial accounting
ISBN: 978-0471467854
1st edition
Authors: ramji balakrishnan, k. s i varamakrishnan, Geoffrey b. sprin