Rock Solid Bank and Trust (RSB&T) offers only checking accounts. Customers can write checks and use a network of automated teller machines. RSB&T earns revenue by investing the money deposited; currently, it averages 5.2 percent annually on its investments of those deposits. To compete with larger banks, RSB&T pays depositors 0.5 percent on all deposits. A recent study classified the bank's annual operating costs into four activities. Activity Using ATM Visiting branch Processing transaction Managing functions Total overhead Cost Driver Number of uses Number of visits Number of transactions Total deposits Data on two representative customers follow Cost $ 1,500,000 900,000 6,600,000 6,000,000 $15,000,000 Driver Volume 2,000,000 uses 150,000 visits 80,000,000 transactions $375,000,000 in deposits
Rock Solid Bank and Trust (RSB&T) offers only checking accounts. Customers can write checks and use a network of automated teller machines. RSB&T earns revenue by investing the money deposited; currently, it averages 5.2 percent annually on its investments of those deposits. To compete with larger banks, RSB&T pays depositors 0.5 percent on all deposits. A recent study classified the bank's annual operating costs into four activities. Activity Using ATM Visiting branch Processing transaction Managing functions Total overhead Cost Driver Number of uses Number of visits Number of transactions Total deposits Data on two representative customers follow Cost $ 1,500,000 900,000 6,600,000 6,000,000 $15,000,000 Driver Volume 2,000,000 uses 150,000 visits 80,000,000 transactions $375,000,000 in deposits
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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