United Savings Bank (USB) is examining the profitability of its Premier Account, a combined savings and checking account..

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2. Unind Savings Bank (USB) is examining the profitability of itn Premier Account, combined savings and checking account (Click the loan to view account Information) USB recently conducted an activity.baned costing study of its service. It assessed the following cost for Individual services. The use of these services in 2020 by three customers follows: (Click the icon to view the conts for the service and customer information) Assume Undell and Colston always maintain a balance above $1.000, whereas Weiler always has a balance below $1.000 Read the requirements Requirement 1. Compute the 2020 profitability of the Lindell, Welker, and Colton Premier Accounts at USB. (For mounts with a $0 balance, make sure to enter in the appropriate coll Round your answers to the nearest cent. Use parentheses or a minus sign for operating losses.) Lindall Welkor Colton Total Revenues Spread revenues on annual basis Monthly fee charges Total revenues Costs Deposit withdrawal with telier Deposit withdrawal with ATM Deposit withdrawal on prearranged basis Bank checks written Foreign currency drafts inquines Total costs Operating income (los) Requirement 2. Wy might USB worry about the profitability of individual customer if the Premier Account product offering profitable as a whole Scross individual Premer Accounts occur when plotis made on some counts are 123 The (3) account is type while account is strably unprofitable. The (5) account to allot but only because the It is unlikely that will keep ying these fees and that USB would want them to pay the roma customer instanspoint The latest that the comes the conserven Form hot of actions with ATM and inquire aboccount bach that USB Camily would get a pents highly profitabilno to the interest rate apread These accounts if other bank offer higher interest rates. Competition likely will (13) USB can ear on the high-balance low-activity counts they are able to retain Requirement 3. What changes would you recommend for USA's Premier Account? Ponable changes USB could make are: accounts to increase USB's competitiveness in a Offer (14) Interest rates on (15) attracting and retaining these accounts h (16) In determining ita pricing strategy, USB (17) need to consider how other competing banks are pricing their products and services, 1: More Info Depositors receive a 2% annual interest rate on their average deposit USB earns an interest rate spread of 3% (the difference between the rate at which it lends money and the rate it pays depositors) by lending money for home loan purposes at 5%. Thus, USB would gain $60 on the interest spread it a depositor had an average Premier Account balance of $2,000 in 2020 (52,000 * 3% $60) The Premier Account allows depositors unlimited use of services such as deposits withdrawals. Checking accounts, and foreign currency dratis. Depositors with Premier Account balances of $1,000 or more receive unlimited free use of services. Depositors with minimum balances of less than $1,000 pay a $22.a-month service tee for the Premier Account 2. Data Table Account Usago Activity-Based Cost per "Transaction" Lindell Welker Colston 2.50 44 49 4 0.80 12 24 13 0:50 0 14 58 5.20 B Deposit withdrawal with teller Deposit/withdrawal with automatic teller machine (ATM) Deposit withdrawal on prearranged monthty basis Bank checks written Foreign currency drafts Inquiries about account balance Average Premier Account balance for 2020 2 12 10 6 1 1.70 18 $ 1.200 $ 700 524,900 3- Requirements 1. Compute the 2020 profitability of the Lindell Wand Colton Prem Account 2 wym Wabout the point of customers the Prome Account offering table 3. W changes would you recomUSES Bremer Account O (1) Cost hierarchies Cross-subsidization Simple Costing offset by losses on other accounts pald in dividends to company shareholders (3) O Colston Lindell Welker (4) (5) (7) OOO Colston Lindell Welker . Colston Lindell Welker monthly fees spread revenue . Colston Lindell Welker (8) D do not use use (9) O Lindell and Coiston Lindell and Welker Welker and Colston (10) Colston Lindell Welker (11) does not need to worry about cross-subsidization should be very concerned about cost hierarchies should be very concerned about cross-subsidization (12) (13) (14) Increase reduce higher lower (15) tugh balance low balance is not (16) Introduce charges for the individual services Introduce charges for the services with a high ABC cost per transaction Introduce charges for the services with a high overall activity level (17) would would not 2. Unind Savings Bank (USB) is examining the profitability of itn Premier Account, combined savings and checking account (Click the loan to view account Information) USB recently conducted an activity.baned costing study of its service. It assessed the following cost for Individual services. The use of these services in 2020 by three customers follows: (Click the icon to view the conts for the service and customer information) Assume Undell and Colston always maintain a balance above $1.000, whereas Weiler always has a balance below $1.000 Read the requirements Requirement 1. Compute the 2020 profitability of the Lindell, Welker, and Colton Premier Accounts at USB. (For mounts with a $0 balance, make sure to enter in the appropriate coll Round your answers to the nearest cent. Use parentheses or a minus sign for operating losses.) Lindall Welkor Colton Total Revenues Spread revenues on annual basis Monthly fee charges Total revenues Costs Deposit withdrawal with telier Deposit withdrawal with ATM Deposit withdrawal on prearranged basis Bank checks written Foreign currency drafts inquines Total costs Operating income (los) Requirement 2. Wy might USB worry about the profitability of individual customer if the Premier Account product offering profitable as a whole Scross individual Premer Accounts occur when plotis made on some counts are 123 The (3) account is type while account is strably unprofitable. The (5) account to allot but only because the It is unlikely that will keep ying these fees and that USB would want them to pay the roma customer instanspoint The latest that the comes the conserven Form hot of actions with ATM and inquire aboccount bach that USB Camily would get a pents highly profitabilno to the interest rate apread These accounts if other bank offer higher interest rates. Competition likely will (13) USB can ear on the high-balance low-activity counts they are able to retain Requirement 3. What changes would you recommend for USA's Premier Account? Ponable changes USB could make are: accounts to increase USB's competitiveness in a Offer (14) Interest rates on (15) attracting and retaining these accounts h (16) In determining ita pricing strategy, USB (17) need to consider how other competing banks are pricing their products and services, 1: More Info Depositors receive a 2% annual interest rate on their average deposit USB earns an interest rate spread of 3% (the difference between the rate at which it lends money and the rate it pays depositors) by lending money for home loan purposes at 5%. Thus, USB would gain $60 on the interest spread it a depositor had an average Premier Account balance of $2,000 in 2020 (52,000 * 3% $60) The Premier Account allows depositors unlimited use of services such as deposits withdrawals. Checking accounts, and foreign currency dratis. Depositors with Premier Account balances of $1,000 or more receive unlimited free use of services. Depositors with minimum balances of less than $1,000 pay a $22.a-month service tee for the Premier Account 2. Data Table Account Usago Activity-Based Cost per "Transaction" Lindell Welker Colston 2.50 44 49 4 0.80 12 24 13 0:50 0 14 58 5.20 B Deposit withdrawal with teller Deposit/withdrawal with automatic teller machine (ATM) Deposit withdrawal on prearranged monthty basis Bank checks written Foreign currency drafts Inquiries about account balance Average Premier Account balance for 2020 2 12 10 6 1 1.70 18 $ 1.200 $ 700 524,900 3- Requirements 1. Compute the 2020 profitability of the Lindell Wand Colton Prem Account 2 wym Wabout the point of customers the Prome Account offering table 3. W changes would you recomUSES Bremer Account O (1) Cost hierarchies Cross-subsidization Simple Costing offset by losses on other accounts pald in dividends to company shareholders (3) O Colston Lindell Welker (4) (5) (7) OOO Colston Lindell Welker . Colston Lindell Welker monthly fees spread revenue . Colston Lindell Welker (8) D do not use use (9) O Lindell and Coiston Lindell and Welker Welker and Colston (10) Colston Lindell Welker (11) does not need to worry about cross-subsidization should be very concerned about cost hierarchies should be very concerned about cross-subsidization (12) (13) (14) Increase reduce higher lower (15) tugh balance low balance is not (16) Introduce charges for the individual services Introduce charges for the services with a high ABC cost per transaction Introduce charges for the services with a high overall activity level (17) would would not