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please work out step by step Rock Solid Bank and Trust (RSB&T) offers only checking accounts. Customers can write checks and use a network of
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Rock Solid Bank and Trust (RSB&T) offers only checking accounts. Customers can write checks and use a network of automated teller machines. RSB&T earns revenue by investing the money deposited, currently, it averages 600 percent annually on its investments of those deposits. To compete with larger banks, RSB&T pays depositors 050 percent on all deposits. A recent study classified the bank's annual operating costs into four activities. Activity Using ATH Visiting branch Processing transaction Managing functions Total overhead Cont Driver Busber of use Number of visits Number of transactions Total deposits Cont Driver Volume $ 2,700,000 3,600,000 usea 1.620,000 270,000 visits 11,380,000 144,000,000 tractions 10, 800,000 $675,000,000 in deposits $27,000,000 Data on two representative customers follow ATM uses Branch visits Number of transactions Average deposit Customer Customer 100 200 5 20 40 1.500 $6,000 $6,000 Required: a. Compute RSB&T's operating profits b. Compute the profit from Customer A and Customer B, assuming that customer costs are based only on deposits. Interest costs - 0.50 percent of deposits, operating costs are 4 percent (= $27,000,000/5675,000,000) of deposits c. Compute the profit from Customer A and Customer B, assuming that customer costs are computed using the information in the activity-based costing analysis Step by Step Solution
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