Hint: Do not make this complicated, since you are given the total overhead cost

Question

Hint: Do not make this complicated, since you are given the total overhead cost and know there are 10 machines.

a. Determine the monthly operating costs of a machine when cost assignments are based on the number of machines. Conceptually this is like the plantwide overhead rate per unit.

Hint: Do not make this complicated, since you are given the total overhead cost and know there are 10 machines.

Happy Banking Company has ten automatic teller machines (ATM) spread throughout the city maintained by the ATM Department.You have been assigned the task of determining the cost of operating each machine. Management will use the information you develop to evaluate the desirability of continuing to operate each machine and/or changing security arrangements for a particular machine The ATM Department consist of a total of six employees: a supervisor, a head cashier wo associate cashiers, and two maintenance personnel. The associate cashiers make between two and four daily trips to each machine to collect and replenish cash and to replenish supplies, deposit tickets and so forth. Each machine contains a small computer that automatically summarizes and reports transactions to the head cashier. The head cashier reconciles the activities of the two associate cashiers to the computerized reports. The supervisor, who does handle cash, reviews the reconciliation When an automatic teller's computer, a customer, or a cashier reports a problem, the two maintenance employees and one cashier are dispatched immediately. The cashier removes all cash and transaction records, and the maintenance employees repair the machine Monthly operating costs and information on percentage of time that used in activities for a recent month follows

Explanation / Answer

Happy Banking Company Activity Based Costing Total costs % Routine Trips % Maintenance % Machine lease, space rent and utilities Supervisor Salary 4200 60 2520 40 1680 0 Head Cashier Salary 3000 75 2250 25 750 0 Associate's Cashier salary 3600 50 1800 50 1800 0 Maintenance worker's salary 3600 0 100 3600 0 Cashier's Service vehicle used for round trip 1500 100 1500 0 0 Maintenance service vehicles used for maintenance 1400 0 100 1400 0 Office rent and utilities used equally 2500 50 1250 50 1250 0 Machine lease, space rent and utilities 15000 0 0 100 15000 Total per activity 9320 10480 15000 Quanity of activity 720 160 Unit activity rates 12.94 65.5 Determination of operating cost assigned to each machine Machine Activity No. Round trips Activity No. Maintenace Equally Machine lease, space rent and utitlities Total 1 30 388.33 5 327.5 1500 2215.83 2 90 1165.00 17 1113.5 1500 3778.50 3 60 776.67 15 982.5 1500 3259.17 4 60 776.67 30 1965 1500 4241.67 5 120 1553.33 15 982.5 1500 4035.83 6 30 388.33 10 655 1500 2543.33 7 90 1165.00 25 1637.5 1500 4302.50 8 120 1553.33 5 327.5 1500 3380.83 9 60 776.67 20 1310 1500 3586.67 10 60 776.67 18 1179 1500 3455.67 9320.0 10480 15000 34800.0

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