Exercise 7-7 First-Stage Allocations [LO7-2] The operations vice president of Se

Question

Exercise 7-7 First-Stage Allocations [LO7-2] The operations vice president of Security Home Bank has been interested in investigating the efficiency of the bank's operations. She the bank's various then replicated to show how those costs are related to the various services provided by the bank. The operations vice president has asked in conducting an activity-based costing 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 particularly concerned about the costs of handling routine transactions at the bank and would like to compare these costs at elsewhere. While the bank maintains meticulous records of wages and other costs, there has been no attempt thus far your help branches. If the branches with the most efficient operations can be identified, their methods can be studied and The Westfield branch of Security Home Bank has submitted the following cost data for last year Teller wages Assistant branch manager salary 75,000 Branch manager salary Total $160,000 86,660 $315,006 Virtually all 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 checks. In addition to the cost data above, the employees of the Westfield branch have been interviewed concerning how their time was distributed last year across the activities included in the activity-based costing study. The results of those interviews appear below

Explanation / Answer

Opening accounts Processing Deposits and withdrawals Processing Other customer transactions Other activities Total Teller wages 8000 104000 32000 16000 160000 Assistant branch manager salary 11250 3750 22500 37500 75000 Branch manager salary 4000 0 8000 68000 80000 Total 23250 107750 62500 121500 315000

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