Simplifying the ABC System: TDABC Golding Bank provided the following data about its two checking account products and their associated resources and activities: Resources Supervision Phone and supplies Salaries Computer Total Activities $62,000 Processing accounts 76,000 Issuing statements 304,000 Processing transactions 26,000 Answering customer inquiries 468,000 Time per Unit 0.20 hr. 0.10 hr. 0.05 hr. 0.15 hr. Activity Driver No. of accounts No. of statements No. of transactions No. of inquiries $ $1 $ Calculate the activity rates for the four activities. Round your answers to the nearest cent. Processing accounts per account Issuing statements per statement Processing transactions per transaction per inquiry Answering inquiries Traditional Interest-Bearing Account Account 2,600 60,000 At practical capacity, Golding uses 26,000 check processing hours. Required: 1. Calculate the capacity cost rate for the checking account process. Round your answer to the nearest cent. $ per hour 160,000 1,500 1,600 10,000 120,000 1,500 2. Assuming there are 2,600 interest-bearing checking accounts, calculate the cost per account using the activity rates from Requirement 1. Round your answers to the nearest cent. Unit cost $ 3. A time equation is used to assign resource costs to checking accounts. Select a time equation for the interest-bearing checking account product. Again, assuming that there are 2,000 interest bearing accounts, show that the resource cost per account is the same as calculated in Requirement 2. Round your answers to the nearest cent. Unit Cost ($ ])×( C
Simplifying the ABC System: TDABC Golding Bank provided the following data about its two checking account products and their associated resources and activities: Resources Supervision Phone and supplies Salaries Computer Total Activities $62,000 Processing accounts 76,000 Issuing statements 304,000 Processing transactions 26,000 Answering customer inquiries 468,000 Time per Unit 0.20 hr. 0.10 hr. 0.05 hr. 0.15 hr. Activity Driver No. of accounts No. of statements No. of transactions No. of inquiries $ $1 $ Calculate the activity rates for the four activities. Round your answers to the nearest cent. Processing accounts per account Issuing statements per statement Processing transactions per transaction per inquiry Answering inquiries Traditional Interest-Bearing Account Account 2,600 60,000 At practical capacity, Golding uses 26,000 check processing hours. Required: 1. Calculate the capacity cost rate for the checking account process. Round your answer to the nearest cent. $ per hour 160,000 1,500 1,600 10,000 120,000 1,500 2. Assuming there are 2,600 interest-bearing checking accounts, calculate the cost per account using the activity rates from Requirement 1. Round your answers to the nearest cent. Unit cost $ 3. A time equation is used to assign resource costs to checking accounts. Select a time equation for the interest-bearing checking account product. Again, assuming that there are 2,000 interest bearing accounts, show that the resource cost per account is the same as calculated in Requirement 2. Round your answers to the nearest cent. Unit Cost ($ ])×( C
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Simplifying the ABC System: TDABC
Golding Bank provided the following data about its two checking account products and their associated resources and activities:
Resources
Supervision
Phone and supplies
Salaries
Computer
Total
Activities
$62,000 Processing accounts
76,000 Issuing statements
304,000 Processing transactions
26,000 Answering customer inquiries
468,000
At practical capacity, Golding uses 26,000 check processing hours.
Required:
$
$
$
Processing accounts
Issuing statements
Processing transactions
Answering inquiries
1. Calculate the capacity cost rate for the checking account process. Round your answer to the nearest cent.
per hour
Calculate the activity rates for the four activities. Round your answers to the nearest cent.
Processing accounts
Issuing statements
Processing transactions
Answering inquiries
per account
per statement
per transaction
per inquiry
Time per Unit Activity Driver
No. of accounts
No. of statements
No. of transactions
No. of inquiries
$
0.20 hr.
0.10 hr.
0.05 hr.
0.15 hr.
$
$
$
Traditional Interest-Bearing
Account
Account
2,600
60,000
160,000
per account
per statement
per transaction
per inquiry
1,500
2. Assuming there are 2,600 interest-bearing checking accounts, calculate the cost per account using the activity rates from Requirement 1. Round your answers to the nearest cent.
Unit cost $
3. A time equation is used to assign resource costs to checking accounts. Select a time equation for the interest-bearing checking account product.
1,600
Again, assuming that there are 2,000 interest bearing accounts, show that the resource cost per account is the same as calculated in Requirement 2. Round your answers to the nearest cent.
Unit Cost = ($
) x (
10,000
120,000
4. What if process improvements decreased the number of customer inquiries, leading to a 10 percent reduction in check processing hours and a $9,360 reduction in total resource costs? Calculate the capacity cost rate for the checking account
process. Round your answers to the nearest cent.
per hour
Update all the activity rates for these changes in operating conditions.
1,500
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