The Maharashtra State Co-operative Bank Limited (MSCB) is examining the profitability of its Premier Account, a combined savings and checking account. Depositors receive a 7% annual interest rate on their average deposit. MSCB earns ar1 interest rate spread of 3% (the difference between the rate at which it lends money and the rate it pays depositors) by lending money for home loan purposes at 10%. Thus: MSCB would gain t60 on the interest spread if a depositor had an average Premier Account balance of 02000 in 2011 2,000 3% 260). The Premier Account allows depositors unlimited use of services such as deposits: Mithdrawals: checking accounts: and foreign currency drafts Depositors with Premier Account balances of or more receive unlimited free use of services. Depositors with minimum balances of less than 12000 pay a 02-a-month service fee for their Premier Account. MSCB recently conducted an activity-based costing study of its services. It assessed the following costs for six individual services. The use of these services in 2011 by three customers is as follows: Deposit/withdrawal with teller Deposit/withdrawal with automatic teller machine (ATM) Deposit/withdrawal on prearranged monthly basis Bank checks written F oreign currency drafts Inquiries about account balance Activity-Based Cost per "T ransaction" 2.30 70 40 40 1240 42 7 0 11 4 12 Account Usage Nitin 48 19 13 2 20 Aj ay 62 3 6 9 Average Premier Account balance for 2011 ooo 042600 Assume and Ajay always maintain a balance 2000, whereas Nitin always has a balance below 1 , 000