Activity-Based Costing for a Service Business Metropolitan Bank uses activity-ba

Question

Activity-Based Costing for a Service Business

Metropolitan Bank uses activity-based costing to determine the cost of servicing customers. There are three activity pools: teller transaction processing, check processing, and ATM transaction processing. The activity rates associated with each activity pool are $3.70 per teller transaction, $0.13 per canceled check, and $0.08 per ATM transaction. Julie Lawson had 9 teller transactions, 110 canceled checks, and 22 ATM transactions during the month.

Determine the total monthly activity-based cost for Lawson during the month. Round your answer to the nearest cent.

Explanation / Answer

Monthly Activity cost for Lawson: Rate Activity Activity Consumed Cost Teller transaction processing 3.7 9 33.3 Check processing 0.13 110 14.3 ATM transaction processing 0.08 22 1.76 Total Activity cost: 49.36

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