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 opeis. She has been particularly concerned about the costs of handling routine transactions at the bank and would like to compare 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 wages Assistant branch manager salary Branch manager salary Total $ 147,000 66,000 86,000 $ 299,000 Virtually all other costs of the branch-rent, depreciation, utilities, and so on-are organization-sustaining costs that cannot 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 de Resource Consumption Across Activities Processing Processing Other Opening Deposits and Customer Other Accounts Withdrawals Transactions Activities Totals Teller wages 5% 69% 188 100% Assistant branch manager salary 14% 18% 25% 43 100% Branch manager salary 5% 08 21% 744 100% 8% 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: : ty *** 74 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 Connumption across activities Processing Processing Other Opening Deposits and Customer Other Account Withdrawals Transactions notivities 59 698 18% B 148 188 25% 438 58 08 21 746 Teller wages Assistant branch manager salary Branch manager salary Total 100% 100$ 1008 13 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 230 new accounts opened 47,500 deposits and withdrawals processed 1,500 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 Opening accounts Processing deposits and withdrawals Processing other customer transactions Activity Rate per account opened per deposit or fithdrawal per other customer transaction Aa tv ? w - 14
