The operations vice president of Security Home Bank has been interested in inves

Question

The operations vice president of Security Home Bank has been interested in investigating the efficiency of the bank's operations. She has been particularly concerned about the costs of handling routine transactions at the bank and would like to compare these costs at the bank's various branches. If the branches with the most efficient operations can be identified, their methods can be studied and then replicated elsewhere. While the bank maintains meticulous records of wages and other costs, there has been no attempt thus far to show how those costs are related to the various services provided by the bank. The operations vice president has asked your help in conducting an activity-based costing study of bank operations. In particular, she would like to know the cost of opening an account, the cost of processing deposits and withdrawals, and the cost of processing other customer transactions. The Westfield branch of Security Home Bank has submitted the following cost data for last year: Virtually all other costs of the branch-rent, depreciation, utilities, and so on-are organization sustaining costs that cannot be meaningfully assigned to individual customer transactions such as depositing checks. In addition to the cost data above, the employees of the Westfield branch have been interviewed concerning how their time was distributed last year across the activities included in the activity-based costing study. The results of those interviews appear below: The manager of the Westfield branch of Security Home Bank has provided the following data concerning the transactions of the branch during the past year: Compute the activity rates for the activity-based costing system. (Round your answers to 2 decimal places.)

Explanation / Answer

Opening accounts Processing Deposits & Withdrawls Processing other customer Transactions Other Activities Total Teller Wages               6,240                106,080                    26,520            17,160          156,000 Asstt. Branch Manager Salary               6,400                   10,240                    16,640            30,720            64,000 Branch Manager Salary               3,800                            -                      15,200            76,000            95,000 Total             16,440                116,320                    58,360          123,880          315,000 Calcullation of Activity Rate Activity Cost Pool Total Cost Total activity Activity Rate a b c = a / b Opening Accounts             16,440                         185 Accounts Opened               88.86 per account opened Processing Deposits & Withdrawls          116,320                   50,000 Deposits & withdrawls Processed                 2.33 per deposit or withdrawl Processing other Customer Transactions             58,360                     1,300 Other Customer Transaction Processed               44.89 per other customer transaction

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