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The operations vice president of Security Home Bank has been Interested in investigating the eiciency of the banks operations. She has been particulany concerned about the costs ot handling routine transactions at the bank and would like to compare these costs at the bank's various branches. If the branches wilh 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 othe costs, there has been no attempt thus far to show how thase 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 bankoperations. 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 wesield branch or Securty Home Bank has submitted the following cost data tor last year $ 145 D0 64,000 Teler wages Assistant branch manager salary Branch manager salary Total s 296,000 Mrtualy all other costs of the branch rent, depreciation, utilities, and so on are organization sustaining costs that cannat be meaningtuly assigned to individual customer transactions such as deposting checks In addition to the cost data above, the employees of the Westfield branch have been interviewed conceming how their time was distributed last year across the activities included in the activity-based costing study. The results of those interviews appear helow Distrbution of Resource Consumption Across Activities Processing Processing Deposits CUEomertvitcs Arcounts Withdrawals Transactions Artivitics 41% Opening and Other Totals Teler wages Assistant branch manager salary Branch manager salary 100% 5% 14% 5% 17% 0% 22% 13% 100% The manager of the Westfield branch of Security Home Bank has provided the following dala concerning the transactions of the branch during the past year. Total Activity at the Westfield Branch Activity Opening accounts Processing deposits and withdrawals Pracessing other customer transactions 235 new accounts opened 45,000 deposits and withdrawals processed 1,300 other customer transactions pracessed The lowest costs reporred by other branches for these activities are cisplayed below Activity Opening accounts Processing deposits and withdrawals Processing other customer transactions $ 6774 $ 2.37 S 49.06 Lowest Cost among All Security Home Bank Branches per new account per deposit or withdrawal per other customer transacton
