Question II

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
Process Checks
Balance Inquiries
Branch Visits
Total Cost
Total Profit