A local regional credit union, Metro Credit Union, has identified the major activities of the credit union, traceable costs, andphysical flow of driver units:ActivitiesTraceable CostsDriver UnitsOpen new accounts$30,000|1,000 accountsProcess deposits26,000400,000 depositsProcess withdrawals10,000200,000 withdrawalsProcess loan applications36,000|900 applications|The following activities are used by the Downtown branch and the East branch:DowntownEastNew accounts200400Deposits40,00015,00020,00018,000WithdrawalsLoan applications100160How much of the loan application cost will be assigned to the Downtown branch?O $ 6,400$10,400$3,000O $4,000

Introduction Activity based costing Activity based costing is not dependent on the traditional…

ical flow of driver units: vities Traceable Costs Driver Units n new accounts $30,000 1,000 accounts cess deposits 26,000 400,000 deposits ess withdrawals 10,000 200,000 withdrawals cess loan applications 36,000 900 applications following activities are used by the Downtown branch and the East branch: Downtown East v accounts 200 400 osits ndrawals 40,000 15,000 20,000 18,000 n applications 100 160 much of the loan application cost will be assigned to the Downtown branch? 6,400 10,400 -3,000 -4,000

ical flow of driver units: vities Traceable Costs Driver Units n new accounts $30,000 1,000 accounts cess deposits 26,000 400,000 deposits ess withdrawals 10,000 200,000 withdrawals cess loan applications 36,000 900 applications following activities are used by the Downtown branch and the East branch: Downtown East v accounts 200 400 osits ndrawals 40,000 15,000 20,000 18,000 n applications 100 160 much of the loan application cost will be assigned to the Downtown branch? 6,400 10,400 -3,000 -4,000

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter12: Activity-based Management

Section: Chapter Questions

Problem 8E: Thayne Company has 30 clerks that work in its Accounts Payable Department. A study revealed the...

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A local regional credit union, Metro Credit Union, has identified the major activities of the credit union, traceable costs, and physical flow of driver units: Activities Traceable Costs Driver Units Open new accounts $30,000 1,000 accounts Process deposits 26,000 400,000 deposits Process withdrawals 10,000 200,000 withdrawals Process loan applications 36,000 900 applications The following activities are used by the Downtown branch and the East branch: - Downtown East New accounts 200 400 Deposits 40,000 20,000 Withdrawals 15,000 18,000 Loan applications 100 160 How much of the deposit cost will be assigned to the East branch? Group of answer choices $36,000 $1,800 $1,300 $ 5,400
Dallas National Bank had the following activities, traceable costs, and physical flow of driver units: Activities Traceable Costs Physical flow of Driver Units Open new accounts $50,000 1,000 accounts Process deposits 36,000 400,000 deposits Process withdrawals 15,000 200,000 withdrawals Process loan applications 27,000 900 applications The above activities are used by the Memorial branch and the University branch: Memorial University New accounts 200 400 Deposits 40,000 20,000 Withdrawals 15,000 18,000 Loan applications 100 160 Refer to Dallas National Bank. What is the cost per driver unit for new account activity? Select one: a. $30.00 b. $0.075 c. $50.00 d. $0.09 PreviousSave AnswersNext
Dallas National Bank had the following activities, traceable costs, and physical flow of driver units: Activities Traceable Costs Physical flow of Driver Units Open new accounts $50,000 1,000 accounts Process deposits 36,000 400,000 deposits Process withdrawals 15,000 200,000 withdrawals Process loan applications 27,000 900 applications The above activities are used by the Memorial branch and the University branch: Memorial University New accounts 200 400 Deposits 40,000 20,000 Withdrawals 15,000 18,000 Loan applications 100 160 Refer to Dallas National Bank. What is the cost per driver unit for the deposit activity? Select one: a. $30.00 b. $0.09 c. $0.075 d. $50.00
Tuscaloosa National Bank has two service departments, the Human Resources (HR) Department and the Computing Department. The bank has two other departments that directly service customers, the Deposit Department and the Loan Department. The usage of the two service departments’ output for the year is as follows: Provider of Service HR Computing User of Service HR ................................................................................ — 15% Computing ...................................................................10% — Deposit ...........................................................................60% 50% Loan .................................................................................30% 35% The…
Best Books, an online book retailer, has two operating departments—corporate sales and consumer sales—and two support departments—human resources and information systems. The following data are available for September 2017: Read the requirements5. Requirement 1. Describe the key features of the reciprocal method. The reciprocal allocation method explicitly includes the mutual services provided (1) .Interdepartmental relationships (2) fully incorporated into the support department cost allocations. Requirement 2. Allocate the support departments' costs (human resources and information systems) to the two operating departments using the reciprocal method. Before we can allocate the support departments' costs to the two operating departments using the reciprocal method, let's first determine the linear equations for each support department. Then off-line…
Burgess Business School has two degree programs, BBA and MBA. The school uses an ABC system to cost the three support services it provides to students from both programs: Career Center, Events, and Library. Following are the costs of these three activities and the cost drivers used in the system: Activity Cost Activity Career Center Event planning and hosting. Library For the most recent year, data collected from the central IT systems indicate the following: MBA 5,600 4,500 30,300 BBA 10,400 5,500 70,700 $ 448,000 440,000 606,000 Cost Driver Interview-hours Event attendance Number of visits Interview-hours Event attendance Library visits Required: a. Compute the cost-driver rates for the three activities at the school. b. Suppose that in a future period, no students from the MBA program visited the Library. What amount of the Library cost would be assigned to the MBA program?
A company uses charging rates to allocate service department costs to the using departments. The accountant compiled the following information on one of the service departments: If Department K plans to use 1,350 hours of the service departments service in the coming year, how much of the service departments cost is allocated to Department K? a. 3,375 b. 27,300 c. 26,325 d. 23,950
Customers as a Cost Object Morrisom National Bank has requested an analysis of checking account profitability by customer type. Customers are categorized according to the size of their account: low balances, medium balances, and high balances. The activities associated with the three different customer categories and their associated annual costs are as follows: Additional data concerning the usage of the activities by the various customers are also provided: Required: (Note: Round answers to two decimal places.) 1. Calculate a cost per account per year by dividing the total cost of processing and maintaining checking accounts by the total number of accounts. What is the average fee per month that the bank should charge to cover the costs incurred because of checking accounts? 2. Calculate a cost per account by customer category by using activity rates. 3. Currently, the bank offers free checking to all of its customers. The interest revenues average 90 per account; however, the interest revenues earned per account by category are 80, 100, and 165 for the low-, medium-, and high-balance accounts, respectively. Calculate the average profit per account (average revenue minus average cost from Requirement 1). Then calculate the profit per account by using the revenue per customer type and the unit cost per customer type calculated in Requirement 2. 4. CONCEPTUAL CONNECTION After the analysis in Requirement 3, a vice president recommended eliminating the free checking feature for low-balance customers. The bank president expressed reluctance to do so, arguing that the low-balance customers more than made up for the loss through cross-sales. He presented a survey that showed that 50% of the customers would switch banks if a checking fee were imposed. Explain how you could verify the presidents argument by using ABC.
Thayne Company has 30 clerks that work in its Accounts Payable Department. A study revealed the following activities and the relative time demanded by each activity: Required: Classify the four activities as value-added or non-value-added, and calculate the clerical cost of each activity. For non-value-added activities, indicate why they are non-value-added.
Roque Press has the service departments (administration and an and two operating departments (college texts and professional publications). Following are the direct costs and allocation bases for each of these areas: Department Administration Editorial College texts Professional publications Direct Costs P 450,000 350,000 2,250,000 950,000 a. P2,250,000 b. P2,702,566 c. P2,493,964 d. P2,458,602 ALLOCATION BASES Pesos of Assets Employed P 620,000 144,000 1,200,000 1,056,000 Number of Employees 10 8555 35 Company management has decided to allocate administration and editorial costs using the pesos of assets employed and number of employees, respectively. Using the reciprocal (algebraic) method: 29. What is the total operating cost after allocation of college textbooks?
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 $ 144,000 74,000 90,000 $ 308,000 Activity Opening accounts Processing deposits and withdrawals Processing other customer transactions Distribution of Resource Consumption Across Activities Processing Deposits and Withdrawals 75% 15% 0% Opening Accounts 4% 15% 4% Activity Cost Pool Opening…
Exercise 7-8 (Algo) Computing and Interpreting Activity Rates [LO7-3] 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 opemtions 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…