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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 5.50 percent annually on its investments of those deposits. To compete with larger banks, RSB&T pays depositors 0.70 percent on all deposits. A recent study classified the bank's annual operating costs into four activates: Data on two representative customers follow: 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 = 0.70 percent of deposits: operating costs are 4 percent ( = $9,000,000/$225,000,000) of deposits. (Do not round your intermediate calculations. Round your answers to 2 decimal places. Negative value should be indicated by a minus sign.) (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. (Do not round your intermediate calculations. Round your answers to 2 decimal places. Negative value should be indicated by a minus sign.)
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