The operations vice president of Security Home Bank is investigating the efficiency of the bank's operations. She is 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 replicated elsewhere. While the bank maintains meticulous records of wages and other costs, there has been no attempt to show how those costs are related to the various services provided by the bank. The operations vice president has asked for 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 submitted the following cost data for last year: Teller wages Assistant branch manager salary Branch manager salary Total $ 155,000 65,000 89,000 $ 309,000 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 were 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:
The operations vice president of Security Home Bank is investigating the efficiency of the bank's operations. She is 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 replicated elsewhere. While the bank maintains meticulous records of wages and other costs, there has been no attempt to show how those costs are related to the various services provided by the bank. The operations vice president has asked for 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 submitted the following cost data for last year: Teller wages Assistant branch manager salary Branch manager salary Total $ 155,000 65,000 89,000 $ 309,000 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 were 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:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Exercise 7-8 (Algo) Computing and Interpreting Activity Rates [LO7-3]
The operations vice president of Security Home Bank is investigating the efficiency of the bank's operations. She is 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 replicated elsewhere. While the
bank maintains meticulous records of wages and other costs, there has been no attempt to show how those costs are related to the
various services provided by the bank. The operations vice president has asked for 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 submitted the following cost data for last year:
Teller wages
Assistant branch manager salary
Branch manager salary
Total
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 were 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:
Teller wages
Assistant branch manager salary
Branch manager salary
$ 155,000
65,000
89,000
$ 309,000
Activity
Opening accounts
Processing deposits and withdrawals
Processing other customer transactions
Distribution of Resource Consumption Across Activities
Processing
Deposits and
Withdrawals
69%
13%
0%
Opening
Accounts
4%
13%
4%
Activity Cost Pool
Opening accounts
Processing deposits and withdrawals
Processing other customer transactions
The manager of the Westfield branch of Security Home Bank provided the following data concerning the branch's transactions
during the past year:
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 Rate
19%
28%
23%
Total Activity at the Westfield Branch
220 new accounts opened
49,500 deposits and withdrawals processed
1,300 other customer transactions processed
Other
Activities
8%
46%
73%
per account opened
per deposit or withdrawal
per other customer transaction
Totals
100%
100%
100%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8692c34d-fc23-4641-9b75-10f2538aeebd%2Fcfe64a3d-1f2f-4fec-ab99-e29a7cb8644c%2Fdb356x_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 7-8 (Algo) Computing and Interpreting Activity Rates [LO7-3]
The operations vice president of Security Home Bank is investigating the efficiency of the bank's operations. She is 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 replicated elsewhere. While the
bank maintains meticulous records of wages and other costs, there has been no attempt to show how those costs are related to the
various services provided by the bank. The operations vice president has asked for 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 submitted the following cost data for last year:
Teller wages
Assistant branch manager salary
Branch manager salary
Total
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 were 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:
Teller wages
Assistant branch manager salary
Branch manager salary
$ 155,000
65,000
89,000
$ 309,000
Activity
Opening accounts
Processing deposits and withdrawals
Processing other customer transactions
Distribution of Resource Consumption Across Activities
Processing
Deposits and
Withdrawals
69%
13%
0%
Opening
Accounts
4%
13%
4%
Activity Cost Pool
Opening accounts
Processing deposits and withdrawals
Processing other customer transactions
The manager of the Westfield branch of Security Home Bank provided the following data concerning the branch's transactions
during the past year:
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 Rate
19%
28%
23%
Total Activity at the Westfield Branch
220 new accounts opened
49,500 deposits and withdrawals processed
1,300 other customer transactions processed
Other
Activities
8%
46%
73%
per account opened
per deposit or withdrawal
per other customer transaction
Totals
100%
100%
100%
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