1.	Compute the 2017 profitability of the Robinson, Stanback, and Grant Premier Accounts at the company.
2.	Why might the company worry about the profitability of individual customers if the Premier Account product offering is profitable as a whole?
3.	What changes would you recommend for Premier Account?

Activity-Based

Cost per

Account Usage

"Transaction"

Robinson

Stanback

Grant

Deposit/withdrawal with teller

$2.30

44

55

5

Deposit/withdrawal with automatic

teller machine (ATM)

0.80

12

23

17

Deposit/withdrawal on prearranged

monthly basis

0.40

0

14

64

Bank checks written

7.90

8

3

1

Foreign currency drafts

12.30

6

2

7

Inquiries about account balance

1.50

8

18

7

Average Premier Account balance

for 2017

$1,125

$875

$25,000

is examining the profitability of its Premier Account, a combined savings and checking account.

"(Depositors receive a 2% annual interest rate on their average deposit. Company earns an interest rate spread of 33%. (the difference between the rate at which it lends money and the rate it paysdepositors) by lending money for home-loan purposes at 5%. Thus, the company would gain $60 on the interest spread if a depositor had an average Premier Account balance of $2,000 in 2017($2,000 x 33% = $60).

The Premier Account allows depositors unlimited use of services such as deposits, withdrawals, checking accounts, and foreign currency drafts. Depositors with Premier Account balances of $1,000 or more receive unlimited free use of services. Depositors with minimum balances of less than $1,000 pay a $25-a-month service fee for their Premier Account.)"

The company recently conducted an activity-based costing study of its services. It assessed the following costs for six individual services. The use of these services in 2017 by three customers is as follows:

Assume Robinson and Grant always maintain a balance above $1,000, whereas Stanback always has a balance below $1,000.Read the requirements

.Requirement 1. Compute the 2017profitability of the Robinson, Stanback, and Grant Premier Accounts at the company.

(For amounts with a $0 balance, make sure to enter "0" in the appropriate cell. Round your answers to the nearest cent. Use parentheses or a minus sign for operating losses.)

	Robinson	Stanback	Grant	Total
Revenues
Spread revenues on annual basis
Monthly fee charges
Total revenues
Costs
Deposit/withdrawal with teller
Deposit/withdrawal with ATM
Deposit/withdrawal on prearranged basis
Bank checks written
Foreign currency drafts
Inquiries
Total costs
Operating income (loss)