First Bank Corporation is using, activity-based cost information to determine whether it can save money by reassigning activities in its bank branches. The following information has been gathered:
| Annual Salary | %Time on Checking Account Customers | %Time on Loan Applicants | %Time Idle |
Tellers–8 | $25,000 | 80 | 5 | 10 |
Loan officers–5 | $32,000 | 20 | 60 | 15 |
In its activity analysis, First Bank found that tellers have about 10 percent idle time while they wait for customers to enter the bank. The analysis also showed that tellers are able to help loan applicants complete initial paperwork. Furthermore, the analysis suggested that about 5 percent of loan officers’ time is spent helping loan applicants complete initial paperwork.
Could First Bank reduce the number of loan officers at the bank branches if the. loan application activity-were transferred to the tellers? What other considerations should the bank investigate before assigning the loan application task to the tellers?
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