The operations vice-president of the Regal Bank of Canada, Kristin Wu, has been interested in investigating the

Question:

The operations vice-president of the Regal Bank of Canada, Kristin Wu, has been interested in investigating the efficiency of the bank€™s operations. She has been particularly concerned about the costs of handling routine transactions at the bank and would like to compare these costs at the bank€™s various branches. If the branches with the most efficient operations can be identified, their methods can be studied and then replicated elsewhere. While the bank maintains meticulous records of wages and other costs, there has been no attempt thus far to show how those costs are related to the various services provided by the bank. Wu has asked for your help in conducting an ABC study of bank operations. In particular, she would like to know the cost of opening an account, the cost of processing deposits and withdrawals, and the cost of processing other customer transactions. The Windsor branch of the Regal Bank of Canada submitted the following cost data for last year:

Teller wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $150,000

Assistant branch manager salary. . . . . . . . . . . . . . . . . . 70,000

Branch manager salary . . . . . . . . . . . . . . . . . . . . . . . . . 85,000

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $305,000

Virtually all of the other costs of the branch€”rent, depreciation, utilities, and so on€”are organization-sustaining costs that cannot be meaningfully assigned to individual customer transactions, such as depositing cheques. In addition to the cost data above, the employees of the Windsor branch have been interviewed concerning how their time was distributed last year across the activities included in the ABC study. The results of those interviews appear below: