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 Teller vages Assistant branch manager salary Branch manager salary Total $ 161,000 66.000 00.000 $295.000 Virtually all other costs of the branch-rent, depreciation, utilities, and so onare 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. Distribution of Resource Consumption Meros tivities Processing Processing Opening Deposite and Other Custom Recounts withdrawals Transactions Teller wages 41551201 asistant branch manager salary 141 121 Branch manager salary Other Activities 111 Totals 1001 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 Activit Opening accounts Processing deposits and withdrawal Processing other customer transactions Total notivity at the vostflold branch 195 new accounts opened 51.500 deposits and withdrawals processed 900 other customer transactions processed Required: 1. Compute the activity rates for the activity based costing system. (Round your answers to 2 decimal places.) Activity Rate Activity Cost Pool Opening accounts Processing deposits and withdrawals Processing other customer transactions per other customer transact

Answer 1

First stage allocation

	Opening accounts	Processing deposits and withdrawals	Processing other customer transaction	Other activities	Total
Teller wages	5640	91650	28200	15510	141000
Assistant branch manager's salaries	9240	7920	15180	33660	66000
Branch manager's salary	3520	0	15840	68640	88000
Total	18400	99570	59220	117810	295000

Calculate activity rate

Opening accounts = 18400/195 = 94.36 per account opened

Processing deposits and withdrawal = 99570/51500 = 1.93 per processing deposits and withdrawal

Processing other customer transaction = 59220/900 = 65.80 per other customer transaction processed