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Exercise 7 - 8 ( Algo ) Computing and Interpreting Activity Rates [ LO 7 - 3 ] The operations vice president of Security Home

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Exercise 7-8(Algo) Computing and Interpreting Activity Rates [LO7-3]
The operations vice president of Security Home Bank has been interested in investigating the efficiency of the bank's operations. She
has been particularly concerned about the costs of handling routine transactions at the bank and would like to compare these costs at
the bank's various branches. If the branches with the most efficient operations can be identified, their methods can be studied and
then replicated elsewhere. While the bank maintains meticulous records of wages and other costs, there has been no attempt thus far
to show how those costs are related to the various services provided by the bank. The operations vice president has asked your help
in conducting an activity-based costing study of bank operations. In particular, she would like to know the cost of opening an account,
the cost of processing deposits and withdrawals, and the cost of processing other customer transactions.
The Westfield branch of Security Home Bank has submitted the following cost data for last year:
Virtually all other costs of the branch-rent, depreciation, utilities, and so on-are organization-sustaining costs that cannot be
meaningfully assigned to individual customer transactions such as depositing checks.
In addition to the cost data above, the employees of the Westfield branch have been interviewed concerning how their time was
distributed last year across the activities included in the activity-based costing study. The results of those interviews appear below:
The manager of the Westfield branch of Security Home Bank has provided the following data concerning the transactions of the
branch during the past year:
Required:
Compute the activity rates for the activity-based costing system. (Round your answers to 2 decimal places.)The operations vice president of Security Home Bank has been interested in investigating the efficiency of the banks operations. She has been particularly concerned about the costs of handling routine transactions at the bank and would like to compare these costs at the banks various branches. If the branches with the most efficient operations can be identified, their methods can be studied and then replicated elsewhere. While the bank maintains meticulous records of wages and other costs, there has been no attempt thus far to show how those costs are related to the various services provided by the bank. The operations vice president has asked your help in conducting an activity-based costing study of bank operations. In particular, she would like to know the cost of opening an account, the cost of processing deposits and withdrawals, and the cost of processing other customer transactions.
The Westfield branch of Security Home Bank has submitted the following cost data for last year:
Teller wages $ 155,000
Assistant branch manager salary 71,000
Branch manager salary 88,000
Total $ 314,000
Virtually all other costs of the branchrent, depreciation, utilities, and so onare organization-sustaining costs that cannot be meaningfully assigned to individual customer transactions such as depositing checks.
In addition to the cost data above, the employees of the Westfield branch have been interviewed concerning how their time was distributed last year across the activities included in the activity-based costing study. The results of those interviews appear below:
Distribution of Resource Consumption Across Activities
Opening Accounts Processing Deposits and Withdrawals Processing Other Customer Transactions Other Activities Totals
Teller wages 5%74%21%0%100%
Assistant branch manager salary 11%17%25%47%100%
Branch manager salary 5%0%23%72%100%
The manager of the Westfield branch of Security Home Bank has provided the following data concerning the transactions of the branch during the past year:
Activity Total Activity at the Westfield Branch
Opening accounts 205 new accounts opened
Processing deposits and withdrawals 53,500 deposits and withdrawals processed
Processing other customer transactions 1,000 other customer transactions processed
Required:
1. Compute the activity rates for the activity-based costing system. (Round your answers to 2 decimal places.)
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