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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
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 6.40 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 Cost $ 3,300,000 Driver Volume 4,400,000 uses Number of visits 1,980,000 330,000 visits Number of transactions 14,520,000 Total deposits 176,000,000 transactions 13,200,000 $825,000,000 in deposits $33,000,000 Data on two representative customers follow. Customer A Customer B ATM uses 100 200 Branch visits 5 Number of transactions 40 Average deposit $6,000 20 1,500 $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 (= $33,000,000/$825,000,000) 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 RSB&T's operating profits. Operating profit < Required A Required B >
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