4. Chippewa River Banking Company has ten automatic teller machines (ATMs) spread throughout the city maintained by the ATM Department. You have the task of determining the cost of operating each machine. Management will use the information you develop, along with other information pertaining to the volume and type of transactions at each machine, to evaluate the desirability of continuing to operate each machine and/or changing security arrangements for a particular machine. The ATM Department consists of six employees: a supervisor, a head cashier, two associate cashiers, and two maintenance personnel. The ATM department is responsible for two main activities: daily trips to restock the machines, and maintenance of the machines. The associate cashiers make between two and four daily trips to each machine to collect and replenish cash and to replenish supplies. Costs associated with these daily trips are driven by the number of trips made. When a problem is reported, the two maintenance employees and one cashier are dispatched immediately. The cashier removes all cash and transaction records, and the maintenance employees repair the machine. Costs associated with maintenance activities are driven by maintenance hours. Maintenance employees spend all of their time on maintenance-related activities. The associate cashiers spend approximately 50 percent of their time on maintenance-related activities and 50 percent on daily trips. The head cashiers time is divided, with 75 percent directly related to daily trips to each machine and 25 percent related to supervising cashiers on maintenance calls. The supervisor devotes 20 percent of the time to daily trips to each machine and 80 percent to the equal supervision of each employee. One third of the office space (and associated utilities) is used for maintenance activities, the remainder of the office space is accommodates the routine daily trips. In a normal month, the ATM department makes 720 routine daily trips, and logs 160 maintenance hours. Cost information for a recent month follows: Salaries Supervisor 4,200 Head cashier 3,000 Associate cashiers ($1,800 each) 3,600 Maintenance personnel ($1,800 each) 3,600 Lease and operating costs Cashiers service vehicle 1,500 Maintenance service vehicle 1,400 Office rent and utilities 2,500 Machine lease and utilities ($1,500 per ATM) 15,000 Total $34,800 Related actual activity information for this month follows: Machine number Routine trips Maintenance hours 7 90 25 8 120 5 a. Determine the monthly operating costs of machines 7 and 8 when overhead costs are distributed evenly between the ATM machines. Parts b e will step through calculating the monthly operating costs of machines 7 and 8 when using activity based costing. b. Identify which of the costs in the table above are overhead costs, and which are direct (can be traced easily to each ATM). c. Assign the overhead costs to the two identified activities (routine daily trips and maintenance). Hint: some of the overhead costs in the table above are split between the two activities. For those costs, use the time and other information given above to assign costs between activities. d. Determine the activity cost overhead rates for the activities. Round answers to the nearest cent. e. Determine the operating costs assigned to machines 7 and 8 using activity-based costing. f. How can ABC cost information be used by Red River Banking Company to improve the overall management of monthly operating costs?