The operations vice-president of the Regal Bank of Canada, Kristin Wu, 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. Wu has asked for your help in conducting an ABC 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 Windsor branch of the Regal Bank of Canada submitted the following cost data for last year: Teller wages Assistant branch manager salary Branch manager salary $150,000 70,000 85,000 Total $305,000 Virtually all of the 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 cheques. In addition to the cost data above, the employees of the Windsor branch have been interviewed concerning how their time was distributed last year across the activities included in the ABC study. The results of those interviews appear below:
The operations vice-president of the Regal Bank of Canada, Kristin Wu, 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. Wu has asked for your help in conducting an ABC 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 Windsor branch of the Regal Bank of Canada submitted the following cost data for last year: Teller wages Assistant branch manager salary Branch manager salary $150,000 70,000 85,000 Total $305,000 Virtually all of the 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 cheques. In addition to the cost data above, the employees of the Windsor branch have been interviewed concerning how their time was distributed last year across the activities included in the ABC study. The results of those interviews appear below:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The operations vice-president of the Regal Bank of Canada, Kristin Wu, 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. Wu has asked for your help in
conducting an ABC 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 Windsor branch of the Regal Bank of Canada submitted the following cost data for last year:
Teller wages
Assistant branch manager salary
Branch manager salary
$150,000
70,000
85,000
Total
$305,000
Virtually all of the 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 cheques.
In addition to the cost data above, the employees of the Windsor branch have been interviewed concerning how their time was
distributed last year across the activities included in the ABC study. The results of those interviews appear below:
Transcribed Image Text:Distribution of Resource Consumption across Activities
Processing
Deposits
Processing
Other
Opening
Accounts
and
Customer
Other
Withdrawals
Transactions
Activities
Totals
Teller wages
15%
10%
50%
80%
0%
75%
100%
Assistant branch manager salary
Branch manager salary
15%
0%
10%
25%
100%
0%
20%
100%
Required:
Prepare the first-stage allocation for Wu.
Opening Processing Deposits
Accounts
Processing Other
Customer
Other
Activities
Totals
and Withdrawals
Transactions
Teller wages
Assistant branch manager salary
Branch manager salary
Total cost
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