Question

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

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 $ 170,000 Assistant branch manager salary 80,000 Branch manager salary 100,000 Total $ 350,000 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: Distribution of Resource Consumption across Activities Opening Accounts Processing Deposits and Withdrawals Processing Other Customer Transactions Other Activities Totals Teller wages 0 % 75 % 15 % 10 % 100 % Assistant branch manager salary 10 % 20 % 25 % 45 % 100 % Branch manager salary 0 % 0 % 10 % 90 % 100 % Required: Prepare the first-stage allocation for Wu. (Do not leave any empty spaces; input a 0 wherever it is required.)

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Answer #1
Opening Accounts Processing Deposits and Withdrawals Processing Other Customer Transactions Other Activities Total
Teller wages 0 127500 25500 17000 170000
Assistant branch manager salary 8000 16000 20000 36000 80000
Branch manager salary 0 0 10000 90000 100000
Total 8000 143500 55500 143000 350000
Workings:
Opening Accounts Processing Deposits and Withdrawals Processing Other Customer Transactions Other Activities
Teller wages 0 =170000*75% =170000*15% =170000*10%
Assistant branch manager salary =80000*10% =80000*20% =80000*25% =80000*45%
Branch manager salary 0 0 =100000*10% =100000*90%
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