Part 3 and 4. (1 and 2 are already solved)

The University Credit Union (UCU) has engaged your services to determine the cost of its various activities. The following data are available for a representative branch.

	Process Deposits	Process Checks	Balance Inquiries	Branch visits	Total Cost
Tellers	30%	40%	10%	20%	$150,000
Assistant Manager	10%	10%	5%	75%	$75,000
Managers	2%	3%	5%	90%	$90,000

The employees are all full-time. The average branch processes 60,000 deposits and 125,000 check transactions and 232,500 balance inquiries and 3,345 branch visits each year.

UCU has also collected the following information about 4 specific customers for the year:

Customer	Process Deposits	Process checks	Balance Inquiries	Branch Visits
A	8,000	15,000	20,000	10
B	2,000	4,000	24,000	18
C	15,000	20,000	35,000	20
D	25,000	35,000	50,000	35

1. Calculate cost per activity to the 0.000th value:

Process Deposits	Cost per deposit:$54,300/60,000 deposits=$0.905 per deposit
Process checks	Cost per check:$70,200/125,000 checks=$0.5616 per check
Balance Inquiries	15,000 + 3,750 + 4,500 = 23,250/232,500 = 0.1 per balance inquiry
Branch Visits	30,000 + 56,250 + 81,000 = 167,250/3,345 = 50 per branch visit

2. Compute Total Profit for customers A, B, C, and D after allocating the cost of their activities. Please use the budgeted rates for cost allocations

	A	B	C	D
Sales dollars	50,000	45000	45,000	30,000
Activity Costs:
Process Deposits	7240	1810	13575	22625
Process Checks	8424	2246.4	11232	19656
Balance Inquiries	2000	2400	3500	5000
Branch Visits	500	900	1000	1750
Total Cost	18164	7356.4	29307	49031
Total Profit	31836	37643.60	15693	-19031

3. Should UCU drop any of the customers A, B, C, D? Why or why not? List 2 factors should they consider before dropping a customer

4. What happens to total firm profits if the number of branch visits received were to drop from 3,345 to 3,000?