Problem 6 Listed below are several costs incurred by the loan department of J P Morgan and Chase Bank. For each cost, indicate which of the following classification best describe the cost. More than one classification may apply to the same cost item. Cost classification a. Controllable by the loan department b. Uncontrollable by the loan department Direct cost of the loan department d. Indirect cost of the loan department Differential cost c. e. f. Marginal cost g. Opportunity cost h. Sunk cost i. Out-of-pocket cost Cost items 1. Salary of the loan department manager 2. Salary of a loan department clerk Cost of office supplies used in the loan department 3. 4. Cost of the department's personal computer purchased by the department manager last year. 5. Cost of general advertising by the bank, which is allocated to the loan department. 6. Revenue that the loan department would have generated for the bank if a branch loan office had been located downtown instead of in the next province. 7. Difference in the cost incurred by the bank when one application loan application is processed. Cost of electricity allocated to the loan department. Price of office supplies purchased and used by the loan department. 10. Depreciation of the office equipment used in the loan department. 8. 9.
Problem 6 Listed below are several costs incurred by the loan department of J P Morgan and Chase Bank. For each cost, indicate which of the following classification best describe the cost. More than one classification may apply to the same cost item. Cost classification a. Controllable by the loan department b. Uncontrollable by the loan department Direct cost of the loan department d. Indirect cost of the loan department Differential cost c. e. f. Marginal cost g. Opportunity cost h. Sunk cost i. Out-of-pocket cost Cost items 1. Salary of the loan department manager 2. Salary of a loan department clerk Cost of office supplies used in the loan department 3. 4. Cost of the department's personal computer purchased by the department manager last year. 5. Cost of general advertising by the bank, which is allocated to the loan department. 6. Revenue that the loan department would have generated for the bank if a branch loan office had been located downtown instead of in the next province. 7. Difference in the cost incurred by the bank when one application loan application is processed. Cost of electricity allocated to the loan department. Price of office supplies purchased and used by the loan department. 10. Depreciation of the office equipment used in the loan department. 8. 9.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Problem 6
Listed below are several costs incurred by the loan department of J P Morgan and
Chase Bank. For each cost, indicate which of the following classification best describe
the cost. More than one classification may apply to the same cost item.
Cost classification
Controllable by the loan department
Uncontrollable by the loan department
Direct cost of the loan department
Indirect cost of the loan department
а.
b.
C.
d.
е.
Differential cost
Marginal cost
g. Opportunity cost
f.
h.
Sunk cost
i.
Out-of-pocket cost
Cost items
Salary of the loan department manager
Salary of a loan department clerk
Cost of office supplies used in the loan department
Cost of the department's personal computer purchased by the department
manager last year.
Cost of general advertising by the bank, which is allocated to the loan
department.
Revenue that the loan department would have generated for the bank if a
branch loan office had been located downtown instead of in the next province.
Difference in the cost incurred by the bank when one application loan
application is processed.
Cost of electricity allocated to the loan department.
Price of office supplies purchased and used by the loan department.
10. Depreciation of the office equipment used in the loan department.
1.
2.
3.
4.
5.
6.
7.
8.
9.
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