Berkeley Bank reports the following information about resources in two functions. Cost Driver Rate $ 0.01 per transaction $ 250 per account Resources used Process transactions Process accounts Resources supplied Process transactions Process accounts $675,000 $360,000 Required: Compute unused resource capacity at Berkeley Bank. Process transactions Process accounts Unused Resource Capacity Cost Driver Volume 40,000,000 transactions 950 accounts

Berkeley Bank reports the following information about resources in two functions. Cost Driver Rate $ 0.01 per transaction $ 250 per account Resources used Process transactions Process accounts Resources supplied Process transactions Process accounts $675,000 $360,000 Required: Compute unused resource capacity at Berkeley Bank. Process transactions Process accounts Unused Resource Capacity Cost Driver Volume 40,000,000 transactions 950 accounts

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 7CE: Golding Bank provided the following data about its resources and activities for its checking account...

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Calculating ABC Unit Costs Perkins National Bank has collected the following information for four activities and two types of credit cards: Activity Driver Classic Gold Activity Rate ($) Processing transactions Transactions processed 12,000 7,200 0.20 Preparing statements Number of statements 12,000 7,200 0.95 Answering questions Number of calls 24,000 36,000 4.00 Providing ATMs ATM transactions 48,000 14,400 1.50 There are 5,000 holders of Classic cards and 21,000 holders of the Gold cards. Required: Calculate the unit cost (rounded to the nearest cent) for Classic and Gold credit cards. Unit cost for Classic $fill in the blank 1 Unit cost for Gold $fill in the blank 2
A customer service department has the following resolution response time data: Average Response Time First contact Service scheduling Wait for service Service 0.25 hr. 0.50 hr. 24.00 hrs. 1.50 hrs. 26.25 hrs. Total resolution time What is the value-added ratio (rounded to one decimal place) in this process? Oa. 8.6% Ob. 91.4% Oc. 28.6% Od. 5.7%
A company makes a product R. which requires one each of two first-level components, 5 and T. Routing data for these items are as follows tem Operation No. Dept Work Center Run Time Per unit Setup Time Average Lot size No. No. Std hours) Std hours) R 10 12 0.80 1.50 20 10 12 16 0.50 0.60 40 20 14 1.20 2.00 40 10 16 1.00 0.40 40 20 14 0.30 1.20 40 (a) The Bill of Capacity for product R (in standard hours) at work center 12 is closest to:
Account Activity and Relationships Each case is independent. Solve for missing data in alphabetical order. (Hint: Refer to Exhibit 18.6, p. 18-17 and the WIP table, p. 18-25.) Case A Case B Case C Case D Sales $425,000 Answer 550,000 Answer Direct materials 75,000 105,000 Answer 105,000 Direct labor 25,000 Answer 100,000 Answer Total direct costs Answer 160,000 Answer 150,000 Conversion cost Answer 130,000 Answer Answer Manufacturing overhead 40,000 Answer 50,000 Answer Current manufacturing costs Answer Answer 475,000 395,000 Work in process, beginning 35,000 50,000 Answer 105,000 Work in process, ending 25,000 Answer 105,000 Answer Cost of goods manufactured Answer 160,000 Answer 410,000 Finished goods inventory, beginning 45,000 40,000 35,000 60,000 Finished goods inventory, ending 30,000 Answer 40,000 Answer Cost of goods sold Answer 175,000 Answer 400,000 Gross profit…
Conlon Enterprises reports the following information about resources. Cost Driver Rate Cost Driver Volume Resources used Setups $ 395 per run 450 runs Clerical 35 per run 3,000 pages typed Resources supplied Setups $181,200 Clerical 113,900 Sales revenue totaled $340,000. Required: Prepare an activity-based income statement. Activity-Based Income Statement Resources Used Unused Resource Capacity Resources Supplied Sales revenue _____________…
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 Assistant…
Conlon Enterprises reports the following information about resources. Cost Driver Rate Cost Driver Volume Resources used Setups $ 370 per run 425 runs Clerical 50 per page 2,500 pages typed Resources supplied Setups $ 160,450 Clerical 133,400 Sales revenue totaled $315,000. Required: a. Prepare a traditional income statement. b. Prepare an activity-based income statement.
Cornerstone Exercise 7-31 Calculating ABC Unit Costs oqrmo gninobro9n ageaea Perry National Bank has collected the following information for four activities and two types of credit cards:en wallokae she aitkop 7pilnquao.bobbonsisbbdo bns noiteanol 2000 ei i bas 1251 orlu boliel oved aomoqmos srls to diod TO Activity Driver Classic Gold Activity Rate Processing transactions Preparing statements re e Number of statements Answering questions Exer Providing ATMS Transactions processed 8,000 e 8,000 viirio/4,800 16,000 32,000 4,800 $0.15 0.90 Number of calls 3.00 24,000 9,600 ATM transactions 1.20 There are 5,000 holders of Classic cards and 20,000 holders of the Gold cards. activities: Required: ese twoho tion molding Calculate the unit cost (rounded to the nearest cent) for Classic and Gold credit cards. The Cornerstone Exercise 7-32 Assigning Costs to Activities Baker Company produces small engines for lawnmower producers. The accounts payable depart- ment at Baker has six clerks who…
Customers as a Cost Object Morrisom National Bank has requested an analysis of checking account profitability by customer type. Customers are categorized according to the size of their account: low balances, medium balances, and high balances. The activities associated with the three different customer categories and their associated annual costs are as follows: Additional data concerning the usage of the activities by the various customers are also provided: Required: (Note: Round answers to two decimal places.) 1. Calculate a cost per account per year by dividing the total cost of processing and maintaining checking accounts by the total number of accounts. What is the average fee per month that the bank should charge to cover the costs incurred because of checking accounts? 2. Calculate a cost per account by customer category by using activity rates. 3. Currently, the bank offers free checking to all of its customers. The interest revenues average 90 per account; however, the interest revenues earned per account by category are 80, 100, and 165 for the low-, medium-, and high-balance accounts, respectively. Calculate the average profit per account (average revenue minus average cost from Requirement 1). Then calculate the profit per account by using the revenue per customer type and the unit cost per customer type calculated in Requirement 2. 4. CONCEPTUAL CONNECTION After the analysis in Requirement 3, a vice president recommended eliminating the free checking feature for low-balance customers. The bank president expressed reluctance to do so, arguing that the low-balance customers more than made up for the loss through cross-sales. He presented a survey that showed that 50% of the customers would switch banks if a checking fee were imposed. Explain how you could verify the presidents argument by using ABC.
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