CNP Bank's retail consumer division offers checking accounts. It makes profits by investing the available deposits/balances from customer accounts, but paying a small interest to attract customer deposits/balances and incurring various operating/overhead costs. Currently CNP earns 6% return on its deposits/balances and pays depositors/customers 1% on average deposits/balances. A recent study classified the operating costs of the bank into four activities. Data on these activities are:

Activity	Cost Driver	Total Cost	Cost Driver Volume
Use ATM	number of uses	$2,000,000	10,000,000 uses
Visit branch	number of visits	6,000,000	6,000,000 visits
Process transaction	number of transactions	4,000,000	40,000,000 transactions
General bank	total deposits/balances	8,000,000	$1,000,000,000 total deposits
Total overhead		$20,000,000

	Customer A	Customer B
ATM uses	10	50
Branch visits	5	25
Number of transactions	10	100
Average deposit/balance	$5,000	$10,000

Data on two representative customers are shown above - there will be thousands of other customers.

Required:

(a) Compute the operating cost allocated to Customers A and B and then calculate the profit CNP earns from Customer A and Customer B, assuming that operating/overhead costs are allocated based on deposits/balances. (3 points)

(b) Do part (a) using the information in the activity-based costing analysis. (5 points)

(c) compare the costs of customers under (a) and (b) and the implications. (2 points)