Happy Banking Company has ten automatic teller machines (ATM) spread throughout
ID: 2600725 • Letter: H
Question
Happy Banking Company has ten automatic teller machines (ATM) spread throughout the city maintained by the ATM Department.You have been assigned the task of determining the cost of operating each machine. Management will use the information you develop to evaluate the desirability of continuing to operate each machine and/or changing security arrangements for a particular machine The ATM Department consist of a total of six employees: a supervisor, a head cashier wo associate cashiers, and two maintenance personnel. The associate cashiers make between two and four daily trips to each machine to collect and replenish cash and to replenish supplies, deposit tickets and so forth. Each machine contains a small computer that automatically summarizes and reports transactions to the head cashier. The head cashier reconciles the activities of the two associate cashiers to the computerized reports. The supervisor, who does handle cash, reviews the reconciliation When an automatic teller's computer, a customer, or a cashier reports a problem, the two maintenance employees and one cashier are dispatched immediately. The cashier removes all cash and transaction records, and the maintenance employees repair the machine Monthly operating costs and information on percentage of time that used in activities for a recent month followsExplanation / Answer
Machines
Operating Cost
Activity
1
2
3
4
5
6
7
8
9
10
Total Cost
Supervisor Salary
Routine trips
105
315
210
210
420
105
315
420
210
210
2,520
Maintenance hours
53
179
158
315
158
105
263
53
210
189
1,680
Head Cashiers Salary
Routine trips
94
281
188
188
375
94
281
375
188
188
2,250
Maintenance hours
23
80
70
141
70
47
117
23
94
84
750
Associated Cashiers Salary
Routine trips
75
225
150
150
300
75
225
300
150
150
1,800
Maintenance hours
56
191
169
338
169
113
281
56
225
203
1,800
Maintenance workers salary
Maintenance hours
113
383
338
675
338
225
563
113
450
405
3,600
Cashiers' service vehicle
Routine trips
63
188
125
125
250
63
188
250
125
125
1,500
Maintenance service vehicle
Maintenance hours
44
149
131
263
131
88
219
44
175
158
1,400
Office rent and Utility
Routine trips
52
156
104
104
208
52
156
208
104
104
1,250
Maintenance hours
39
133
117
234
117
78
195
39
156
141
1,250
Machine lease, space rent, and utilities
1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
15,000
Total Cost per machine
2,216
3,779
3,259
4,242
4,036
2,543
4,303
3,381
3,587
3,456
34,800
Total Cost for Routine trips=2520+2250+1800+1500+1250
= 9320
Total cost for Maintenance hours = 1680+750+1800+3600+1400+1250
= 10480
Thus by ABC cost information we can manage the cost more effectively, by knowing the cost per activity per machine.
Machine
Routine trips
Maintainance hours
Supervisor Salary
Head Cashier Salary
Associated Cashier Salary
Maintenance workers salary
Cashiers' service vehicle used for routine trips
Maintenance service vehicle
Office rent & utility
Machine lease, Space rent & utilities
Total
Routine trips
Maintenance hours
Routine trips
Maintenance hours
Routine trips
Maintenance hours
maintenance hours
Routine trips
Maintenace hours
Routine trips
Maintenance hours
1
30
5
$ 104
$ 53
$ 92
$ 23
$ 74
$ 56
$ 113
$ 62
$ 44
$ 51
$ 39
$ 1,500
$ 2,211
2
90
17
$ 311
$ 179
$ 277
$ 80
$ 222
$ 191
$ 383
$ 185
$ 149
$ 154
$ 133
$ 1,500
$ 3,763
3
60
15
$ 207
$ 158
$ 185
$ 70
$ 148
$ 169
$ 338
$ 123
$ 131
$ 103
$ 117
$ 1,500
$ 3,249
4
60
30
$ 207
$ 315
$ 185
$ 141
$ 148
$ 338
$ 675
$ 123
$ 263
$ 103
$ 234
$ 1,500
$ 4,231
5
120
15
$ 414
$ 158
$ 370
$ 70
$ 296
$ 169
$ 338
$ 247
$ 131
$ 205
$ 117
$ 1,500
$ 4,015
6
30
10
$ 104
$ 105
$ 92
$ 47
$ 74
$ 113
$ 225
$ 62
$ 88
$ 51
$ 78
$ 1,500
$ 2,538
7
90
25
$ 311
$ 263
$ 277
$ 117
$ 222
$ 281
$ 563
$ 185
$ 219
$ 154
$ 195
$ 1,500
$ 4,287
8
120
5
$ 414
$ 53
$ 370
$ 23
$ 296
$ 56
$ 113
$ 247
$ 44
$ 205
$ 39
$ 1,500
$ 3,360
9
60
20
$ 207
$ 210
$ 185
$ 94
$ 148
$ 225
$ 450
$ 123
$ 175
$ 103
$ 156
$ 1,500
$ 3,576
10
70
18
$ 242
$ 189
$ 216
$ 84
$ 173
$ 203
$ 405
$ 144
$ 158
$ 120
$ 141
$ 1,500
$ 3,573
730
160
$ 2,520
$ 1,680
$ 2,250
$ 750
$ 1,800
$ 1,800
$ 3,600
$ 1,500
$ 1,400
$ 1,250
$ 1,250
$ 15,000
$ 34,800
Machines
Operating Cost
Activity
1
2
3
4
5
6
7
8
9
10
Total Cost
Supervisor Salary
Routine trips
105
315
210
210
420
105
315
420
210
210
2,520
Maintenance hours
53
179
158
315
158
105
263
53
210
189
1,680
Head Cashiers Salary
Routine trips
94
281
188
188
375
94
281
375
188
188
2,250
Maintenance hours
23
80
70
141
70
47
117
23
94
84
750
Associated Cashiers Salary
Routine trips
75
225
150
150
300
75
225
300
150
150
1,800
Maintenance hours
56
191
169
338
169
113
281
56
225
203
1,800
Maintenance workers salary
Maintenance hours
113
383
338
675
338
225
563
113
450
405
3,600
Cashiers' service vehicle
Routine trips
63
188
125
125
250
63
188
250
125
125
1,500
Maintenance service vehicle
Maintenance hours
44
149
131
263
131
88
219
44
175
158
1,400
Office rent and Utility
Routine trips
52
156
104
104
208
52
156
208
104
104
1,250
Maintenance hours
39
133
117
234
117
78
195
39
156
141
1,250
Machine lease, space rent, and utilities
1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
15,000
Total Cost per machine
2,216
3,779
3,259
4,242
4,036
2,543
4,303
3,381
3,587
3,456
34,800
Total Cost for Routine trips=2520+2250+1800+1500+1250
= 9320
Total cost for Maintenance hours = 1680+750+1800+3600+1400+1250
= 10480
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