Calculating ABC Unit Costs Community Credit Union has collected the following in
ID: 2541367 • Letter: C
Question
Calculating ABC Unit Costs
Community Credit Union has collected the following information for four activities and two types of credit cards:
There are 12,500 holders of Silver cards and 50,000 holders of Premium cards.
Required:
Calculate the unit cost (rounded to the nearest cent) for Silver and Premium credit cards.
Activity Driver Classic Gold Activity Rate Processing transactions Transactions processed 20,000 12,000 $0.20 Preparing statements Number of statements 20,000 12,000 0.85 Answering questions Number of calls 40,000 60,000 2.00 Providing ATMs ATM transactions 80,000 24,000 1.80Explanation / Answer
Total cost Driver Classic Gold Activity Rate Classic Gold Transactions processed 20,000 12,000 0.20 $ 4,000 $ 2,400 Number of statements 20,000 12,000 0.85 $ 17,000 $ 10,200 Number of calls 40,000 60,000 2.00 $ 80,000 $ 1,20,000 ATM transactions 80,000 24,000 1.80 $ 1,44,000 $ 43,200 Total cost for the cards $ 2,45,000 $ 1,75,800 Number of cards $ 12,500 $ 50,000 Unit cost $ 19.60 $ 3.52 Unit costs for the two cards are $19.60 and $3.52. PLEASE NOTE THAT THE NAMES OF THE CARDS IN COLUMN 4 & 5 OF THE TABLE ARE GIVEN AS CLASSIC AND GOLD; BUT MENTIONED AS SILVER AND PLATINUM THEREAFTER. PLEASE USE NAMES APPROPRIATELY IN THE ANSWER, AFTER CHECKING WHICH IS CORRECT.
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