Gibson Banks start-up division establishes new branch banks. Each branch opens with three tellers. Total teller cost per branch is $93,000 per year. The three tellers combined can process up to 85,000 customer transactions per year. If a branch does not attain a volume of at least 55,000 transactions during its first year of operations, it is closed. If the demand for services exceeds 85,000 transactions, an additional teller is hired and the branch is transferred from the start-up division to regular operations.

Required

1. What is the relevant range of activity for new branch banks?

2. Determine the amount of teller cost in total and the average teller cost per transaction for a branch that processes 55,000, 65,000, 75,000, or 85,000 transactions. In this case (the activity base is the number of transactions for a specific branch), is the teller cost a fixed or a variable cost?

3. Determine the amount of teller cost in total and the average teller cost per branch for Gibson Bank, assuming that the start-up division operates 25, 30, 35 or 40 branches. In this case (the activity base is the number of branches), is the teller cost a fixed or a variable cost?

What is the relevant range of activity for new branch banks? (Enter the lower end of the relevant range first.)

The relevant range is

to

transactions.

Determine the amount of teller cost in total and the average teller cost per transaction for a branch that processes 55,000, 65,000, 75,000, or 85,000 transactions. In this case (the activity base is the number of transactions for a specific branch), is the teller cost a fixed or a variable cost? (Round "Average per unit teller cost" to 2 decimal places.)

No. of Transactions	55,000	65,000	75,000	85,000
Total teller cost
Average per unit teller cost
The teller cost is a

Determine the amount of teller cost in total and the average teller cost per branch for Gibson Bank, assuming that the start-up division operates 25, 30, 35 or 40 branches. In this case (the activity base is the number of branches), is the teller cost a fixed or a variable cost?

No. of Branches	25	30	35	40
Teller costs per branch
Total teller cost
The teller cost is a