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 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: Teller wagen $ 148,000 Assistant branch manager salary 64,000 Branch manager salary 95.000 $ 307,000 Total 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 Resource Consumption neross Activities Processing Processing Other Opening Deposits and Customer Other Accounts Withdrawals Transactions Activities Totalo Teller wages 1001 Assistant branch manager salary 270 1001 Branch manager salary 09 201 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 200 new accounts opened 50.000 deposits and withdrawals processed Processing other customer transactions 1.200 other customer transactions processed 270 88 40 131 715 165 761 1000 Processing deposits and withdrawals 00 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 Resource Consumption across Activities Processing Processing Other Opening Deposits and Customer Other Accounts withdrawals Transactions Activities Teller wages Totala 710 175 88 100% Assistant branch manager salary 131 166 271 441 1000 Branch manager salary 41 200 765 1000 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 motivity at the Wontfield Branch Opening accounts 200 new accounts opened Processing deposits and withdrawals 50.000 deposits and withdrawals processed Processing other customer transactions 1,200 other customer transactions processed Required: 1. Compute the activity rates for the activity-based costing system. (Round your answers to 2 decimal places.) Activity Cost Pool Activity Rate Opening accounts per account opened Processing deposits and withdrawals per deposit or withdrawal Processing other customer transactions per other customer transaction
