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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
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 7.00 percent annually on its investments of those deposits. To compete with larger banks, RSB&T pays depositors 0.50 percent on all deposits. A recent study classified the bank's annual operating costs into four activities. Activity Using ATM Visiting branch Processing transaction Managing functions Total overhead Cost Driver Number of uses Number of visits Cost $ 4,200,000 2,520,000 Number of transactions 18,480,000 Total deposits Driver Volume 5,600,000 uses 420,000 visits: 224,000,000 transactions 16,800,000 $1,050,000,000 in deposits $42,000,000 Data on two representative customers follow. Customer A Customer B ATM uses 100 200 Branch visits 5 Number of transactions 48 $6,000 20 1,500 $6,000 Average deposit 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 (= $42.000.000/$1,050,000,000) 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. Complete this question by entering your answers in the tabs below. Required A Required B Required C Compute RSBRT's operating profite
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