E4-43 (similar to) Rectangular Snip Question Help The Dawson branch of Albany State Savings Bank (ASSB) is a retail branch in a rapidly growing residential area. It services individuals and local businesses. To support its services, the branch employs 14 tellers, 3 retail sales managers (RSM), and the branch managing officer. The branch services about 2,500 customers. Each of the 70 branches of ASSB is implementing ABC in order to improve profitability. ASSB's branch managing officers have been given the responsibility to implement activity-based costing. The managing officer at the Dawson branch decided to implement a two-stage ABC system The following process map depicts its two-stage ABC system. (Click the icon to view the process map.) The results of the ABC study are summarized in the "Internal Activity Analysis": (Click the icon to view the internal activity analysis.) (Click the icon to view the cost data for the last year.) A part of the activity analysis conducted at the Dawson branch of Albany State Savings Bank (ASSB) was identifying potential cost drivers for each major activity. The following cost drivers were chosen because they were both plausible and reliable and data were available: (Click the icon to view the cost driver data.) (Click the icon to view the calculation of traceable costs.) E: (Click the icon to view the benchmarking data.) Read the requirements. DIVUL UTIL New accounts 70,000 530 $ 132.0755 Deposits and withdrawals $ 292,000 / 159,000 $ 1.8365 Other transactions $ 127,000 / 49,000 $ 2.5918 Next, compute the total account cost for each customer class. (Round your answers to the nearest whole dollar.) Retail 2642 New accounts Process deposits and withdrawals Process other transactions Total cost Resource Allocated cost Activity Open new accounts Tellers $ 57,000 13,000 Retail sales managers $ 70,000 All employees have been interviewed as part of the ABC study. For example, tellers were asked how they spent their time. Three major activities were identified. They said that they spent most of their time (65%) processing deposits and withdrawals. They also estimated that they spent about 15% of their time processing new accounts and about 10% of their time processing other transactions. The remaining 10% of their time was spent on all other banking activities. The results of the interviews are presented in the following table: Internal Activity Analysis Process All Other Open New Deposits and Process Other Banking Accounts Withdrawals Transactions Activities Total Teller wages 15% 65% 10% 10% 100% Retail sales 5% 15% 25% 55% 100% manager salary Managing officer 0% 5% 20% 75% 100% Total traceable cost Resource Allocated cost Activity Process deposits Tellers $ and withdrawals Retail sales managers 247,000 39,000 6,000 Managing officers salary $ 292.000 Total traceable cost Activity Resource Allocated cost Process other Tellers $ 38,000 transactions Retail sales managers The Dawson branch has the following cost data for the last year, Teller wages $ 380,000 RSM salaries and benefits 260,000 Managing officer salary and benefits 120,000 490,000 Other bank costs 1,250,000 Total The "other bank costs" include depreciation on the facility including furniture, building, equipment, insurance, rentals of computers, contracted computer services, telecommunications, and utilities. These costs cannot be directly or indirectly related to routine bank activities, such as processing new accounts or processing deposits or withdrawals, and thus, are unallocated. There are no costs that can be traced directly to customers so the Dawson branch has just two types of costs-indirect and unallocated. 65,000 24,000 Managing officers $ 127,000 Total traceable cost Activity Cost Driver Annual Flow of Cost Driver Process new accounts Number of new accounts 530 Of the 2,500 customers of the branch, only 500 are local businesses. The business-customer class generated 20 new accounts, 87,000 deposits and withdrawals, and 24,000 other transactions. The implementation of ABC at all branches of ASSB provided sufficient data for internal benchmarking. The following are the lowest activity costs among all branches implementing two-stage ABC systems Activity Lowest Activity Cost per Driver Unit Open new account $153.58 per new account Process deposits and withdrawals $2.64 per deposit or withdrawal Process other transactions $2.84 per transaction Customer Class Lowest Customer Cost per Account Process deposits and withdrawals Number of deposits and 159,000 withdrawals Number of other transactions Process other transactions 49.000 Retail $146.42 Commercial $504.93 E4-43 (similar to) Rectangular Snip Question Help The Dawson branch of Albany State Savings Bank (ASSB) is a retail branch in a rapidly growing residential area. It services individuals and local businesses. To support its services, the branch employs 14 tellers, 3 retail sales managers (RSM), and the branch managing officer. The branch services about 2,500 customers. Each of the 70 branches of ASSB is implementing ABC in order to improve profitability. ASSB's branch managing officers have been given the responsibility to implement activity-based costing. The managing officer at the Dawson branch decided to implement a two-stage ABC system The following process map depicts its two-stage ABC system. (Click the icon to view the process map.) The results of the ABC study are summarized in the "Internal Activity Analysis": (Click the icon to view the internal activity analysis.) (Click the icon to view the cost data for the last year.) A part of the activity analysis conducted at the Dawson branch of Albany State Savings Bank (ASSB) was identifying potential cost drivers for each major activity. The following cost drivers were chosen because they were both plausible and reliable and data were available: (Click the icon to view the cost driver data.) (Click the icon to view the calculation of traceable costs.) E: (Click the icon to view the benchmarking data.) Read the requirements. DIVUL UTIL New accounts 70,000 530 $ 132.0755 Deposits and withdrawals $ 292,000 / 159,000 $ 1.8365 Other transactions $ 127,000 / 49,000 $ 2.5918 Next, compute the total account cost for each customer class. (Round your answers to the nearest whole dollar.) Retail 2642 New accounts Process deposits and withdrawals Process other transactions Total cost Resource Allocated cost Activity Open new accounts Tellers $ 57,000 13,000 Retail sales managers $ 70,000 All employees have been interviewed as part of the ABC study. For example, tellers were asked how they spent their time. Three major activities were identified. They said that they spent most of their time (65%) processing deposits and withdrawals. They also estimated that they spent about 15% of their time processing new accounts and about 10% of their time processing other transactions. The remaining 10% of their time was spent on all other banking activities. The results of the interviews are presented in the following table: Internal Activity Analysis Process All Other Open New Deposits and Process Other Banking Accounts Withdrawals Transactions Activities Total Teller wages 15% 65% 10% 10% 100% Retail sales 5% 15% 25% 55% 100% manager salary Managing officer 0% 5% 20% 75% 100% Total traceable cost Resource Allocated cost Activity Process deposits Tellers $ and withdrawals Retail sales managers 247,000 39,000 6,000 Managing officers salary $ 292.000 Total traceable cost Activity Resource Allocated cost Process other Tellers $ 38,000 transactions Retail sales managers The Dawson branch has the following cost data for the last year, Teller wages $ 380,000 RSM salaries and benefits 260,000 Managing officer salary and benefits 120,000 490,000 Other bank costs 1,250,000 Total The "other bank costs" include depreciation on the facility including furniture, building, equipment, insurance, rentals of computers, contracted computer services, telecommunications, and utilities. These costs cannot be directly or indirectly related to routine bank activities, such as processing new accounts or processing deposits or withdrawals, and thus, are unallocated. There are no costs that can be traced directly to customers so the Dawson branch has just two types of costs-indirect and unallocated. 65,000 24,000 Managing officers $ 127,000 Total traceable cost Activity Cost Driver Annual Flow of Cost Driver Process new accounts Number of new accounts 530 Of the 2,500 customers of the branch, only 500 are local businesses. The business-customer class generated 20 new accounts, 87,000 deposits and withdrawals, and 24,000 other transactions. The implementation of ABC at all branches of ASSB provided sufficient data for internal benchmarking. The following are the lowest activity costs among all branches implementing two-stage ABC systems Activity Lowest Activity Cost per Driver Unit Open new account $153.58 per new account Process deposits and withdrawals $2.64 per deposit or withdrawal Process other transactions $2.84 per transaction Customer Class Lowest Customer Cost per Account Process deposits and withdrawals Number of deposits and 159,000 withdrawals Number of other transactions Process other transactions 49.000 Retail $146.42 Commercial $504.93