ock Solid Bank and Trust (RSB&T) offers only checking accounts. Customers can write checks and use a network of automated teller machines. RSB&T earns revenue by investing the money deposited; currently, it averages 6.60 percent annually on its investments of those deposits. To compete with larger banks, RSB&T pays depositors 0.50 percent on all deposits. A recent study classified the bank’s annual operating costs into four activities. Activity Cost Driver Cost Driver Volume Using ATM Number of use $3,600,000 $4,800,000 uses Visiting branch Number of visits 2,160,000 360,000 visits Processing transaction Number of transactions 15,840,000 192,000,000 transactions Managing functions Total deposits 14,400,000 $900,000,000 in deposits Total overhead $36,000,000 Data on two representative customers follow. Customer A Customer B ATM uses 100 200 Branch visits 5 20 Number of transactions 40 1,500 Average deposit $6,000 $6,000 Required: Compute RSB&T’s operating profits. Operating profit _________________ Compute the profit from Customer A and Customer B, assuming that customer costs are based only on deposits. Interest costs = (0.5: #, # # 0.00), percent of deposits; operating costs are 4 percent (= $36,000,000/$900,000,000) of deposits. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Profit Per Customer Customer A _________________ Customer B _________________ Compute the profit from Customer A and Customer B, assuming that customer costs are computed using the information in the activity-based costing analysis. (Do not round intermediate calculations. Round your answers to 2 decimal places. Loss amounts should be indicated by a minus sign.) Customer A Customer B Sales revenue ___________ ___________ Interest on deposit ___________ ___________ Total operating cost ___________ ___________ Customer profit/loss ___________ ___________
Rock Solid Bank and Trust (RSB&T) offers only checking accounts. Customers can write checks and use a network of automated teller machines. RSB&T earns revenue by investing the money deposited; currently, it averages 6.60 percent annually on its investments of those deposits. To compete with larger banks, RSB&T pays depositors 0.50 percent on all deposits. A recent study classified the bank’s annual operating costs into four activities.
Activity Cost Driver Cost Driver Volume
Using ATM Number of use $3,600,000 $4,800,000 uses
Visiting branch Number of visits 2,160,000 360,000 visits
Processing transaction Number of transactions 15,840,000 192,000,000 transactions
Managing functions Total deposits 14,400,000 $900,000,000 in deposits
Total
Data on two representative customers follow.
Customer A Customer B
ATM uses 100 200
Branch visits 5 20
Number of transactions 40 1,500
Average deposit $6,000 $6,000
Required:
- Compute RSB&T’s operating profits.
Operating profit _________________
- Compute the profit from Customer A and Customer B, assuming that customer costs are based only on deposits. Interest costs = (0.5: #, # # 0.00), percent of deposits; operating costs are 4 percent (= $36,000,000/$900,000,000) of deposits. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Profit Per Customer
Customer A _________________
Customer B _________________
- Compute the profit from Customer A and Customer B, assuming that customer costs are computed using the information in the activity-based costing analysis. (Do not round intermediate calculations. Round your answers to 2 decimal places. Loss amounts should be indicated by a minus sign.)
Customer A Customer B
Sales revenue ___________ ___________
Interest on deposit ___________ ___________
Total operating cost ___________ ___________
Customer
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