Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
Problem 7-19 The Trust Department of First National Bank offers two types of service, Basic and Premier. Trust customers with basic service do not grant
Problem 7-19 The Trust Department of First National Bank offers two types of service, Basic and Premier. Trust customers with basic service do not grant trust officers any discretion in managing their accounts. The trust officers or their assistants merely execute the actions prescribed by the customer and send monthly statements. Premier customers grant the trust officers broad discretion in managing their accounts, including the buying, selling, and distribution of trust assets. For years, the Trust Department's vice president assumed that the cost of these services was based on the amount of time the trust officers spent working on the accounts. But after some ebbs and flows in the market and the advent of various software packages for executing transactions, the vice president has begun to suspect that the costs of the services may have shifted. He has gathered the following information about the activities required by each service: Activity Pool Department Costs $576,000 1,296,000 1,008,000 $2,880,000 Cost Driver Basic account maintenance Transaction processing Account analysis Total Trust Department costs Number of accounts Number of transactions Trust officer labor hours Other information is as follows Number of accounts Number of transactions Total trust officer labor hours Basic 2,000 6,000 15,000 Premier 1,000 14,000 15,000 How many trust officer hours does each type of account consume, on average? (Round answers to 2 decimal places, e.g. 15.25.) Basic hours per account Premier hours per account How many trust officer hours does each type of account consume, on average? (Round answers to 2 decimal places, e.g. 15.25.) Basic hours per account Premier hours per account How many transactions does each type of service generate, on average? (Round answers to 2 decimal places, e.g. 15.25.) Basic transactions per account Premier transactions per account Using the traditional method of allocating Trust Department costs, which is based on trust officer labor hours, compute cost per hour. (Round answer to 2 decimal places, e.g. 15.25.) Cost per hour $ per hour Using the traditional method of allocating Trust Department costs, which is based on trust officer labor hours, compute the cost per account to provide services to Basic and Premier customers. (Round cost per hour and final answers to 2 decmial places, e.g. 15.25.) Basic Cost per account $ Using the traditional method of allocating Trust Department costs, which is based on trust officer labor hours, compute the cost per account to provide services to Basic and Premier customers. (Round cost per hour and final answers to 2 decmial places, e.g. 15.25.) Basic Cost per account$ Using activity-based costing, compute ABC rates. (Round answers to 2 decimal places, e.g. 15.25.) ABC rates Maintenance /account transaction /hour Transaction processing $ Account analysis Using activity-based costing, compute the cost per account to provide services to Basic and Premier customers. (Round all rates and final answers to 2 decmial places, e.g. 15.25.) Basic Premier Cost per account $ Click if you would like to Show Work for this question: Open Show Work
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started