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What is the total operating cost for Customer A and Customer B? Rock Solid Bank and Trust (RS8&T) offers only checking accounts. Customers can write
What is the total operating cost for Customer A and Customer B?
Rock Solid Bank and Trust (RS8&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 5.2 percent annually on its investments of those deposits. To compete with larger banks, RSB&T pays depositors 0.5 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 Cost Driver Cost Driver Volume Number of uses Number of visits Number of transactions Total deposits $ 1,500,000 900,000 6,600,000 6,000,000 $ 15,000,000 2,000,000 uses 150,000 vists 80,000,000 transactions $375,000,000 in deposits Total overhead Data on two representative customers follow ATM uses Branch visits Number of transactions Average deposit 100 200 20 1,500 $8,000 40 $6,000
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