Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Farmers & Ranchers Bank was formed in 1913 to provide banking services to an area of the rural southwestern United States. Their business consisted primarily

Farmers & Ranchers Bank was formed in 1913 to provide banking services to an area of the rural southwestern United States. Their business consisted primarily of crop and cattle production loans to the local agricultural community. During the 1960's oil and natural gas were discovered in the area which has provided an additional customer base of industry personnel. These personnel together with local supporting businesses created additional demand for personal banking services. By the 1980's the Bank had established several dozen branches in smaller communities. At that time, the bank began installing an Automated Teller Machine (ATM) at these branches. The ATMs not only provided additional hours of service, they replaced a few of the tellers. While tellers do remain in most locations, the number of tellers has grown very little. The number of ATMS, on the other hand, has grown substantially to the present. Some larger branches have more than one ATM and some locations are only an ATM.

1. Using a unit level analysis, develop a graph with two lines representing the Bank's cost

structure. (Be sure to label the axes and lines. You must develop the appropriate data to

support the answers in your graph.)

o In the 1980s

o at the present time

2. With sales revenues as the independent variable, what is the likely impact of the changed

cost structure on the Bank's

o Contribution Margin Percent

o Break Even Point

3. Discuss how the change in the cost structure affected the Bank's operating leverage and

how this affects profitability under rising or falling sales scenarios.

4. Provide 3 specific managerial decisions that can have an impact on the degree of

operating leverage of a firm.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting Volume 2

Authors: Thomas Beechy, Joan Conrod, Elizabeth Farrell, Ingrid McLeod-Dick

6th Edition

1259105482, 9780071338820

More Books

Students also viewed these Accounting questions

Question

Examine various types of executive compensation plans.

Answered: 1 week ago

Question

1. What is the meaning and definition of banks ?

Answered: 1 week ago

Question

2. What is the meaning and definition of Banking?

Answered: 1 week ago

Question

3.What are the Importance / Role of Bank in Business?

Answered: 1 week ago

Question

2. Ask questions, listen rather than attempt to persuade.

Answered: 1 week ago