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Friendly Bank is developing an activity-based cost system for its teller department. A task force has identified five different activities: (1) process deposits, (2) process withdrawals, (3) answer customers inquiries, (4) sell negotiable instruments, and (5) balance drawers. By tracing the cost of operating the teller department to these five activities, task force has completed the following information regarding support costs and activities for one of its suburban branches:

a. Compute the activity cost drivers rates for each of the support activities.

(a) Activity Estimated Activity Cost Monthly Planned Activity Rate Costs Drivers Cost Driver Quantity

Process Deposits 29,630 No. of deposits processed 33,250 0.89

Process withdrawals 26,080 No. of withdrawals processed 22,750 1.14

Answer inquiries 24,860 No. of inquiries 45,000 0.55

Sell negotiable instruments 4,860 No. of instruments sold 1,100 4.42

Balance drawers 4,290 No. of drawers balanced 1,300 3.30 89,720

b. The task force has developed the following list of activities for a typical checking account marketed to retired persons:

(b) Activity Average Monthly Rate Activity Cost Driver Rate Total Support Costs Process deposits 2.3 Process withdrawals 6.0 Answer customer inquiries 2.1 Sell negotiable instruments 0.5 Total Support Costs 10.9