Baller Financial is a banking services compnay that offers many different types

Question

Baller Financial is a banking services compnay that offers many different types of checking accounts. The bank has recently adopted an activity-based consting system to assign costs to their various types of chcking accounts. the following data relate to the money market checking accounts, one of the popular checkking accounts, and the ABC cost pools: Cost Pool: returned check costs $2,900,000 Checking account reconciliation costs $52,000 New account set up $636,000 Copies of cancelled checks $377,000 Online banking maintenance $189,000 Cost Drivers: # of returned checks # of reconciliation requests # of new accounts # of cancelled check copy requests Per product group Annual Activity information related to cost drivers: Cost Pool returned check 191,000 (money market closing 18,000) Check reconciliation costs 377,000 (money market closing 420) New accounts 51,000 (money market closing 15,000) cancelled check copy requests 91,000 (money market closing 60,000) Website costs 6 types of new accounts (money market closing 1) Calculate the overhead cost per account for the money market checking?

Explanation / Answer

Cost Pool Cost drivers Overhead / driver returned check costs $2,900,000 Cost Pool returned check 191,000            15.18 Checking account reconciliation costs $52,000 Check reconciliation costs 377000              0.14 New account set up $636,000 New accounts 51000            12.47 Copies of cancelled checks $377,000 cancelled check copy requests 91000              4.14 Online banking maintenance $189,000 Website costs accounts 6    31,500.00 the overhead cost per account for the money market checking Cost drivers Overhead / driver Overhead Cost Pool returned check 18000                                                     15.18    273,298.43 Check reconciliation costs 420                                                       0.14              57.93 New accounts 15000                                                     12.47    187,058.82 cancelled check copy requests 60000                                                       4.14    248,571.43 Website costs accounts 1                                            31,500.00      31,500.00 TOTAL    740,486.61

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