Answered step by step
Verified Expert Solution
Question
1 Approved Answer
UUIVUUN VIUUULUSUI UIUIUUUUUI U ULCILIUL JY JLU LIRUL LUUUIL5 dll VI-ILLUIS COSILS based on direct labor. STE 1 4-42 Two-Stage Activity-Based Costing-Stage One The Maple
UUIVUUN VIUUULUSUI UIUIUUUUUI U ULCILIUL JY JLU LIRUL LUUUIL5 dll VI-ILLUIS COSILS based on direct labor. STE 1 4-42 Two-Stage Activity-Based Costing-Stage One The Maple Lake branch of Buffalo State Savings Bank (BSSB) is a retail branch in a rapidly grow- ing residential area. It services individuals and local businesses. To support its services, the branch employs 14 tellers, 3 retail sales managers (RSM), and the branch managing officer. The branch services about 3,100 customers. Each of the 70 branches of BSSB is implementing ABC in order to improve profitability. BSSB's branch managing officers have been given the responsibility to imple- ment activity-based costing. The managing officer at the Maple Lake branch decided to implement 11 two-stage ABC system. Exhibit 4-18 depicts its two-stage ABC system. The Maple Lake branch has the following cost data for the last year: . Teller wages RSM salaries and benefits Managing officer salary and benefits Other bank costs Total $ 370,000 220,000 120,000 400.000 $1,110,000 HT DECISION MAKING TWO-Stage ABC TELLERS RETAIL SALES MANAGERS $220,000 MANAGING OFFICER $120,000 OTHER RESOURCES (UNALLOCATED) $400,000 $370,000 DORM ORM 20% 15% OPEN NEW ACCOUNTS 55% 15% 10% 15% 30% 35% PROCESS PROCESS DEPOSITS AND OTHER WITHDRAWALS TRANSACTIONS No. of No. of PDW Deposits and POT Transactions -Withdrawals No. of ONA New Accounts Exhibit 4-18 Two-Stage ABC at the Maple Lake Branch of BSSB The "other bank costs" include depreciation on the facility including furniture, building, equipment, insurance, rentals of computers, contracted computer services, telecommunications, and utilities. These costs cannot be directly or indirectly related to routine bank activities, such as processing new accounts or processing deposits or withdrawals, and, thus, are unallocated. There are no costs that can be traced directly to customers so the Maple Lake branch has just two types of costs-indirect and unallocated. All employees have been interviewed as part of the ABC study. For example, tellers were asked how they spent their time. Three major activities were identified. They said that they spent most of their time (55%) processing deposits and withdrawals. They also estimated that they spent about 20% of their time processing new accounts and about 15% of their time processing other transactions. The remaining 10% of their time was spent on all other banking activities. The complete results of the interviews are presented in the following table: Open New Accounts 20% 15% Internal Activity Analysis Process Deposits and Process Other withdrawals Transactions 55% 15% 15% 30% All Other Banking Activities 10% 40% Teller wages Retail sales manager salary Managing officer salary Total 100% 100% 10% 35% 55% 100% Determine the total cost of each of the three major activities conducted at the Maple Lake branch of BSSB. Use Exhibit 4-18 as a guide. (Note that this represents the first stage in the two-stage ABC method) 4-42 Consumption Rate Allocated Cost Total Cost Cost Activity Open New Accounts Resource Tellers Retail Sales Managers Tellers Process Deposits and Withdrawals Retail Sales Managers Managing Officer Tellers Process Other Transactions Retail Sales Managers Managing Officer
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started