Fordson Bank operates a branch in a relatively small rural community. Fordson has a strong customer service focus and knows that branch visits can be important in fostering a reputation for good customer service. However, as internet banking increases in popularity, the financial staff at Fordson question whether the costs of the branch are worth it. As part of looking at the question, a financial analyst has collected monthly data on the number of customer visits to the branch and the operating cost of the branch over the last fiscal year. The data follow: Month Customer Visits 1 3 11 12 962 1,378 1,170 1,014 1,586 1,580 1,40€ 1,222 1,144 1,248 1,430 1,040 1,092 1,066 Branch Cost $ 71,534 90,046 80,790 73,848 15,898 Branch cost= 99,302 327304 83,104 83,40% 79,633 13,633 84,261 69,20 92,360 75,005 77,319 76,162 Required: a. Estimate the monthly fixed costs and the unit variable cost per customer visit using the high-low estimation method. Note: Round variable cost per unit to 2 decimal places. per visit Customer visits

Fordson Bank operates a branch in a relatively small rural community. Fordson has a strong customer service focus and knows that branch visits can be important in fostering a reputation for good customer service. However, as internet banking increases in popularity, the financial staff at Fordson question whether the costs of the branch are worth it. As part of looking at the question, a financial analyst has collected monthly data on the number of customer visits to the branch and the operating cost of the branch over the last fiscal year. The data follow: Month Customer Visits 1 3 11 12 962 1,378 1,170 1,014 1,586 1,580 1,40€ 1,222 1,144 1,248 1,430 1,040 1,092 1,066 Branch Cost $ 71,534 90,046 80,790 73,848 15,898 Branch cost= 99,302 327304 83,104 83,40% 79,633 13,633 84,261 69,20 92,360 75,005 77,319 76,162 Required: a. Estimate the monthly fixed costs and the unit variable cost per customer visit using the high-low estimation method. Note: Round variable cost per unit to 2 decimal places. per visit Customer visits

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Fordson Bank operates a branch in a relatively small rural community. Fordson has a strong customer service focus and knows that
branch visits can be important in fostering a reputation for good customer service. However, as internet banking increases in
popularity, the financial staff at Fordson question whether the costs of the branch are worth it.
As part of looking at the question, a financial analyst has collected monthly data on the number of customer visits to the branch and
the operating cost of the branch over the last fiscal year. The data follow:
Month Customer Visits
1
2
3
4
5
6
7
8
10
12
962
1,378
1,170
1,014
1,586
1,222
1,144
1,248
1,430
1,040
1,092
1,066
Branch Cost
$ 71,534
90,046
80,790
73,848
99,302
83,104
79,633
84,261
Branch cost=
92,360
75,005
77,319
76,162
Required:
a. Estimate the monthly fixed costs and the unit variable cost per customer visit using the high-low estimation method.
Note: Round variable cost per unit to 2 decimal places.
per visit Customer visits

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