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 operations 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 Total $ 160,000 75,000 80,000 $ 315,000 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 Other Opening Accounts Processing Deposits and Withdrawals Teller wages 5% 65% Assistant branch manager salary 15% Branch manager salary 5% 5% 0% Customer Transactions Other Activities Totals 20% 10% 100% 30% 50% 100% 10% 85% 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 Total Activity at the Westfield Branch 500 new accounts opened 100,000 deposits and withdrawals processed 5,000 other customer transactions processed Processing other customer transactions Required: 1. Compute the activity rates for the activity-based costing system. Note: Round your answers to 2 decimal places. Activity Cost Pool Activity Rate Opening accounts per account opened Processing deposits and withdrawals Processing other customer transactions per deposit or withdrawal per other customer transaction

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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 operations 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
Total
$ 160,000
75,000
80,000
$ 315,000
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 Other
Teller wages
Assistant branch manager salary
Branch manager salary
Opening
Accounts
5%
Processing Deposits
and Withdrawals
65%
15%
5%
5%
0%
Customer
Transactions
20%
Other
Activities
10%
Totals
100%
30%
50%
100%
10%
85%
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
Total Activity at the Westfield Branch
500 new accounts opened
100,000 deposits and withdrawals processed
5,000 other customer transactions processed
Processing deposits and withdrawals
Processing other customer transactions
Required:
1. Compute the activity rates for the activity-based costing system.
Note: Round your answers to 2 decimal places.
Activity Cost Pool
Activity Rate
Opening accounts
per account opened
Processing deposits and withdrawals
Processing other customer transactions
per deposit or withdrawal
per other customer transaction
Transcribed Image Text: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 operations 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 Total $ 160,000 75,000 80,000 $ 315,000 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 Other Teller wages Assistant branch manager salary Branch manager salary Opening Accounts 5% Processing Deposits and Withdrawals 65% 15% 5% 5% 0% Customer Transactions 20% Other Activities 10% Totals 100% 30% 50% 100% 10% 85% 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 Total Activity at the Westfield Branch 500 new accounts opened 100,000 deposits and withdrawals processed 5,000 other customer transactions processed Processing deposits and withdrawals Processing other customer transactions Required: 1. Compute the activity rates for the activity-based costing system. Note: Round your answers to 2 decimal places. Activity Cost Pool Activity Rate Opening accounts per account opened Processing deposits and withdrawals Processing other customer transactions per deposit or withdrawal per other customer transaction
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