Problem 11-23A (Algo) Context-sensitive nature of cost behavior classifications LO 11-1, 11-2 Gibson Bank's start-up division establishes new branch banks. Each branch opens with three tellers. Total teller cost per branch is $95,000 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 a. What is the relevant range of activity for new branch banks? b. 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? c. 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 15, 20, 25 or 30 branches. In this case (the activity base is the number of branches), is the teller cost a fixed or a variable cost? Complete this question by entering your answers in the tabs below. Required A Required B Required C 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 Fixed cost References Worksheet Difficulty: 2 Medium Learning Objective: 11-02 Demonstrate the effects of operating leverage on profitability. Problem 11-23A (Algo) Context- Learning Objective: 11-01 Identify and sensitive nature of cost describe fixed, variable, and mixed cost behavior classifications LO 11- behavior. 1, 11-2Problem 11-23A (Algo) Context-sensitive nature of cost behavior classifications LO 11-1, 11-2 Gibson Bank's start-up division establishes new branch banks. Each branch opens with three tellers. Total teller cost per branch is $95,000 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 a. What is the relevant range of activity for new branch banks? b. 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? . 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 15, 20, 25 or 30 branches. In this case (the activity base is the number of branches), is the teller cost a fixed or a variable cost? Complete this question by entering your answers in the tabs below. Required A Required B Required C 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 15, 20, 25 or 30 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 15 20 25 30 Teller costs per branch Total teller cost The teller cost is a Variable cost
