AMA

AMA

S24 Question 18: A bank offers three products viz, deposits, Loans and Credit Cards. The bank selected 4 activities for a detailed budgeting exercise, following activity based costing methode The bank wants to know the product wise total cost per unit for the selected activities, so tha prices may be fixed accordingly. The following information is made available to formulate the budget: Activity Present cost Estimation for the budget period (1) ATM Service: (a) Machine maintenance 4,00,000 (all fixed; no change) (bl Rents 2.00.000 Fully faed, no change) Id Currency Replenishment cost 1.00.000 expected to double during budget period 7,00.000 (This activity is driven by no. of ATM transactions Computer Processing 5.00.000 Hall this amount is fund and no change expected (The variable portion is expected to increase to three times the current level. This activity is driven by the number of computer transactions Issuing Statement 18.00.000 Presently 3 la statements are made in the budget period, 5 lac statements are expected for every increase of one lac statement, one ac rupees h the budgeted increase this activity driven by the number of statements Customer inquiries 2.00.000 Estimated to increase by 10during the budget period. The activity is driven by telephone minute The activity drivers and their budgeted quantities are given below Deposits Las Credit Cards No. of ATM Transactions 1.50.000 50.000 No ol Computer processing Transactions 15.00.000 200.000 100.000 Na of Statements to be used 150.000 50.000 100.000 Telephone minutes 160.000 10.000 10.000 The bank budgets a volume of 50.600 deposit accounts, 13.000 loan accounts, and 10.000 credit card accounts Required (1) Calculate the budgeted rate for each activity C) Prepare the budgeted cost statement activity wise. TIM) Find the budgeted product cost per account for each product using) and () above