Exercise 7-8 (Algo) Computing and Interpreting Activity Rates (L07-3] The operations vice president of Security Home Bank has been interested in investigating the efficiency of the bank's operations. She has been particularly concemed 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 stucty 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, Tallee wages Assistant branch manager salary Branch manager salary Total $154,00 71.000 90.000 $ 15,00 Virtually all other costs of the brancherent depreciation Utilities, and so on-are organization sustaining costs 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 source Compt Acress is Processing other 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. Distribution of Wesource Consumption Across Activities Opening Accounts 45 Processing Deposits and withdrawal 66% 1 ex Teller wages Assistant branch manager salary Branch manager salary Processing Other Curstoner Transactions 16% 21 TO Other Activities 145 Totals 100 100% 100% 40 BOX The manager of the Westfield branch of Security Home Bonk has provided the following data concerning the transactions of the branch during the past year Activity Opening accounts Processing deposits and withdrais Processing other customer transactions Total Activity with strach 240ccounts opened 45, deposits with a procese 1.100 other customer transaction processed Required: 1 Compute the activity rates for the activity-based costing system (Round your answers to 2 decimal places.) Activity Rate Activity Cost Pool Opening accounts per account opened Accounts Teller wages Assistant branch manager salary Branch manager 8% 4% Withdrawals 66% 18% 0% Transactions 16% 21% 16% Activities 14% 53% 80% Totals 100% 100% 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 Opening accounts Processing deposits and withdrawals Processing other customer transactions Total Activity, at the Westfield Branch 240 new accounts opened 45,588 deposits and withdrawals processed 1,300 other customer transactions processed Required: 1. Compute the activity rates for the activity based costing system. (Round your answers to 2 decimal places.) Activity Rate Activity Cost Pool Opening accounts Processing deposits and withdrawals Processing other customer transactions por account opened per deposit or withdrawal per other customer transaction
