Exercise 7-8 (Algo) Computing and Interpreting Activity Rates (LO7-3] 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 opemtions 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 wages Assistant branch manager salary Branch manager salary $ 145,000 74,000 94,000 $ 313,000 Total Virtually all other costs of the branch-rent, depreciation, utilities, and so on–are 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 Across Activities Processing Deposits and Other Customer Withdrawals Processing Opening Other Accounts Transactions Activities Totals Teller wages Assistant branch manager salary Branch manager salary 58 728 168 78 1008 88 148 268 528 1008 58 08 15% 808 1008 The manager of the Westfield branch of Security Home Bank has provided the following data concerning the transactions of the
Exercise 7-8 (Algo) Computing and Interpreting Activity Rates (LO7-3] 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 opemtions 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 wages Assistant branch manager salary Branch manager salary $ 145,000 74,000 94,000 $ 313,000 Total Virtually all other costs of the branch-rent, depreciation, utilities, and so on–are 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 Across Activities Processing Deposits and Other Customer Withdrawals Processing Opening Other Accounts Transactions Activities Totals Teller wages Assistant branch manager salary Branch manager salary 58 728 168 78 1008 88 148 268 528 1008 58 08 15% 808 1008 The manager of the Westfield branch of Security Home Bank has provided the following data concerning the transactions of the
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Exercise 7-8 (Algo) Computing and Interpreting Activity Rates [LO7-3]
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 opemtions 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 wages
Assistant branch manager salary
Branch manager salary
$ 145,000
74,000
94,000
Total
$ 313,000
Virtually all other costs of the branch–rent, depreciation, utilities, and so on–are 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 Across Activities
Processing
Deposits and
Withdrawals
Processing
Opening
Other Customer
Other
AccountS
Transactions
Activities
Totals
Teller wages
Assistant branch manager salary
Branch manager salary
5%
72%
16%
7%
100%
8%
14%
26%
528
100%
5%
0%
15%
808
100%
The manager of the Westfield branch of Security Home Bank has provided the following data concerning the transactions of the
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Transcribed Image Text:Exercise 7-8 (Algo) Computing and Interpreting Activity Rates [LO7-3]
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 opemtions 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 wages
Assistant branch manager salary
Branch manager salary
$ 145,000
74,000
94,000
Total
$ 313,000
Virtually all other costs of the branch–rent, depreciation, utilities, and so on–are 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 Across Activities
Processing
Deposits and
Withdrawals
Processing
Opening
Other Customer
Other
AccountS
Transactions
Activities
Totals
Teller wages
Assistant branch manager salary
Branch manager salary
5%
72%
16%
7%
100%
8%
14%
26%
528
100%
5%
0%
15%
808
100%
The manager of the Westfield branch of Security Home Bank has provided the following data concerning the transactions of the
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![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 Across Activities
Processing
Deposits and Other Customer
Withdrawals
Processing
Opening
Other
Accounts
Teller wages
Transactions
Activities
Totals
Assistant branch manager salary
72%
16%
7%
100%
Branch manager salary
8%
14%
26%
52%
100%
5%
0%
15%
80%
100%
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:
Activity
Opening accounts
Processing deposits and withdrawals
Processing other customer transactions
Total Activity at the Westfield Branch
185 new accounts opened
50,500 deposits and withdrawals processed
1,500 other customer transactions processed
Required:
1. Compute the activity rates for the activity-based costing system. (Round your answers to 2 decimal places.)
Activity Cost Pool
Activity Rate
Opening accounts
per account opened
Processing deposits and withdrawals
per deposit or withdrawal
Processing other customer transactions
per other customer transaction
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Transcribed Image Text: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 Across Activities
Processing
Deposits and Other Customer
Withdrawals
Processing
Opening
Other
Accounts
Teller wages
Transactions
Activities
Totals
Assistant branch manager salary
72%
16%
7%
100%
Branch manager salary
8%
14%
26%
52%
100%
5%
0%
15%
80%
100%
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:
Activity
Opening accounts
Processing deposits and withdrawals
Processing other customer transactions
Total Activity at the Westfield Branch
185 new accounts opened
50,500 deposits and withdrawals processed
1,500 other customer transactions processed
Required:
1. Compute the activity rates for the activity-based costing system. (Round your answers to 2 decimal places.)
Activity Cost Pool
Activity Rate
Opening accounts
per account opened
Processing deposits and withdrawals
per deposit or withdrawal
Processing other customer transactions
per other customer transaction
Prev
6 of 8
Next >
585
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