Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 11, Problem 23P
Problem 2-19A Context-sensitive nature of cost behavior classifications
Seattle Bank’s start-up division establishes new branch banks. Each branch opens with three tellers. Total teller cost per branch is $96,000 per year. The three tellers combined can process up to 90,000 customer transactions per year. It a branch does not attain a volume of at least 60,000 transactions during its first year of operations, it is closed. If the demand for services exceeds 90,000 transactions, an additional teller is hired and the branch is transferred from the start-up division to regular operations.
Required
- a. What is the relevant range of activity for new branch banks?
- b. Determine the amount of teller cost in total and the average teller cost per transaction for a branch that processes 60,000, 70,000, 80,000, or 90,000 transactions. In this case (the activity base is the number of transactions for a specific branch), is the teller cost a fixed or a variable cost? Round your figures to two decimal points.
- c. Determine the amount of teller cost in total and the average teller cost per branch for Seattle Bank, assuming that the start-up division operates 10, 15, 20, or 25 branches. In this case (the activity base is the number of branches), is the teller cost a fixed or a variable cost?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Problem 2-19A (Algo) Context-sensitive nature of cost behavior classifications LO 2-1
Vernon Bank's start-up division establishes new branch banks. Each branch opens with three tellers. Total teller cost per branch is
$96,000 per year. The three tellers combined can process up to 85,000 customer transactions per year. If a branch does not attain a
volume of at least 55,000 transactions during its first year of operations, it is closed. If the demand for services exceeds 85,00O
transactions, an additional teller is hired and the branch is transferred from the start-up division to regular operations.
Required
a. What is the relevant range of activity for new branch banks?
b. Determine the amount of teller cost in total and the average teller cost per transaction for a branch that processes 55,000, 65,000,
75,000, or 85,000 transactions. In this case (the activity base is the number of transactions for a specific branch), is the teller cost a
fixed or a variable cost?
c. Determine the…
Book
B
Hint
Print
Toxaway Company is a merchandiser that segments its business into two divisions-Commercial and Residential. The company's
accounting intern was asked to prepare segmented income statements that the company's divisional managers could use to calculate
their break-even points and make decisions. She took the prior month's companywide income statement and prepared the absorption
format segmented income statement shown below:
References
Mc
Graw
Hill
Sales
Cost of goods sold
Gross margin
Selling and administrative expenses
Net operating income
Total
Company
$ 825,000
555,500
269,500
260,000
$ 9,500
Commercial Residential
$275,000 $ 550,000
154,000
401,500
148,500
146,000
$ 2,500
121,000
114,000
$ 7,000
In preparing these statements, the intern determined that Toxaway's only variable selling and administrative expense is a 10% sales
commission on all sales. The company's total fixed expenses include $79,500 of common fixed expenses that would continue to be
incurred even if…
In-store branch at Lily location
In-store branch at Daisy location
Existing facilities
Return
15.00%
15.50%
12.00
Deviation
6.50%
7.50%
5.00
Other Services
0.5
0.3
Total Assets
5.00%
5.00
95.00
6. First National Bank of Conway is considering installing two ATMs in its Southside
branch. The new machines are expected to cost $37,000 apiece. Installation costs
will amount to about $15,000 per machine. Each machine has a projected useful life
of 10 years. Due to rapid growth in the Southside district, these two machines are
expected to handle 50,000 cash transactions per year. On average, each cash transac-
tion is expected to save 30 cents in teller expenses. If First National has a 10 percent
cost of capital, should the bank proceed with this investment project?
Chapter 11 Solutions
Survey Of Accounting
Ch. 11 - 1.Define fixed cost and variable cost and give an...Ch. 11 - Prob. 2QCh. 11 - 3.Define the term operating leverage and explain...Ch. 11 - Prob. 4QCh. 11 - Prob. 5QCh. 11 - 6.If volume is increasing, would a company benefit...Ch. 11 - Explain the risk and rewards to a company that...Ch. 11 - 9.Are companies with predominately fixed cost...Ch. 11 - 10.How is the relevant range of activity related...Ch. 11 - Which cost structure has the greater risk?...
Ch. 11 - 14.The president of Bright Corporation tells you...Ch. 11 - Prob. 12QCh. 11 - Prob. 13QCh. 11 - Prob. 14QCh. 11 - Prob. 15QCh. 11 - Prob. 16QCh. 11 - Prob. 17QCh. 11 - Prob. 1ECh. 11 - Prob. 2ECh. 11 - Prob. 3ECh. 11 - Exercise 2-4A Determining total variable cost The...Ch. 11 - Prob. 5ECh. 11 - Prob. 6ECh. 11 - Prob. 7ECh. 11 - Prob. 8ECh. 11 - Prob. 9ECh. 11 - Prob. 10ECh. 11 - Prob. 11ECh. 11 - Prob. 12ECh. 11 - Prepare an income statement using the contribution...Ch. 11 - Prob. 14ECh. 11 - Prob. 15ECh. 11 - Prob. 16ECh. 11 - Prob. 17ECh. 11 - Prob. 18ECh. 11 - Prob. 19ECh. 11 - Prob. 20ECh. 11 - Prob. 21PCh. 11 - Prob. 22PCh. 11 - Problem 2-19A Context-sensitive nature of cost...Ch. 11 - Prob. 24PCh. 11 - Prob. 25PCh. 11 - Prob. 26PCh. 11 - Prob. 27PCh. 11 - Prob. 28PCh. 11 - Prob. 29PCh. 11 - Prob. 1ATCCh. 11 - Prob. 2ATCCh. 11 - Prob. 3ATCCh. 11 - Prob. 4ATCCh. 11 - Prob. 5ATC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Exercise 10-32 (Algo) Activity-Based Costing of Customers (LO 10-3, 4) Rock Solid Bank and Trust (RSB&T) offers only checking accounts. Customers can write checks and use a network of automated teller machines. RSB&T earns revenue by investing the money deposited; currently, it averages 5.50 percent annually on its investments of those deposits. To compete with larger banks, RSB&T pays depositors 0.50 percent on all deposits. A recent study classified the bank’s annual operating costs into four activities. Activity Cost Driver Cost Driver Volume Using ATM Number of uses $ 1,950,000 2,600,000 uses Visiting branch Number of visits 1,170,000 195,000 visits Processing transaction Number of transactions 8,580,000 104,000,000 transactions Managing functions Total deposits 7,800,000 $ 487,500,000 in deposits Total overhead $ 19,500,000 Data on two representative customers follow. Customer A Customer B ATM uses 100 200…arrow_forwardQuestion 8 Step method Prosperous Bank has three support areas (administration, human resources, and accounting) and three revenue-generating areas (checking accounts, savings accounts, and loans). Monthly direct costs and the interdepartmental support structure are shown in the following benefits- provided ranking: Percentage of Service Used by Department Direct Costs Admin Human Resources Accounting Checking Savings Loans Administration 10 10 $1,080,000 720,000 600,000 1,260,000 675,000 1,350,000 Compute the total cost for each revenue-generating area of the bank using the step-method of cost allocation. Note: Do not round proportions in your calculations; round your final answer to the nearest whole dollar. Checking s Savings Loans Total S Human resources Accounting Checking Savings Loans 10 10 10 10 10 30 30 40 40 20 20 288 30 20arrow_forwardProblems Problem 1 (Accept or Reject an Order) As a result of an expansion program, Marianas, Inc., has excess capacity of 40,000 machine hours, which is expected to be absorbed by the domestic market in a few months. The company has received inquiries from two companies located in another country. One offers to buy 21,000 units of Product A at P1.20 per unit; the second offers to buy 30,000 units of Product B at P1.40 per unit. Marianas, Inc. can accept only one of these tv/o offers. The standard cost for these two products is as follows: PRODUCT B PRODUCT A P0.50 Materials PO.70 Labor 0.20 0.24 Factory overhead Total standard cost 0.40 P1.10 0.56 P1.50 Factory overhead is applied on a machine-hour basis at P11.20 per hour, 75% factory overhead is estimated to be fixed. No marketing and administrative expenses would be applicable to either order. Transportation charges are to be paid by the buyer. Required: Which order should be accepted?arrow_forward
- Knowledge Check 01 Match the term and the definition. 1. Adventure Holiday sells thousands of tour packages each month through its various branches. A branch manager's salary would be a(n). of selling a tour package. is a cost that is incurred to support a number of cost objects but cannot be 2 A traced to them individually 3. Adventure Holiday sells thousands of tour packages each month through its various branches A branch manager's salary would be a(n) of the brancharrow_forwardExercise 9-9 (Algo) Return on investment analysis LO A1 A growing chain is trying to decide which store location to open. The first location (A) requires a $500,000 investment in average assets and is expected to yield annual income of $65,000. The second location (B) requires a $200,000 investment in average assets and is expected to yield annual income of $42,000. (1) Compute the expected return on investment for each location. (2) Using return on investment, which location (A or B) should the company open?arrow_forwardQUESTION 4 You have been recently promoted to the divisional manager of Hadi Ltd (“the Company”), a company with 25 branches around the country. As a profit center, your division performance, is assessed by the head office on a monthly basis. The head office expects the controllable profit of your division to be at least 35% of sales. The following figures are related to your division for the month of June 2021: Direct materials £50,000 Direct labour £40,000 Variable overheads £30,000 Sales £200,000 Depreciation £14,000 Fixed overheads excluding depreciation £25,000 Head office cost allocation…arrow_forward
- Question 3 Your company manufactures tables, normally 500 units per month you just got an order for 1,000 units for delivery next month, and are considering accepting it or not. "Capacity" issues under consideration would include do you have enough skilled employees? do you have enough machines? do you have enough time as a manager to oversee such a large order? all of the listed answers are correct True or false....... Financing through debt is more "risky" to a organization versus selling common shares True Falsearrow_forwardDeposit Loan Allocation of HR Department costs Allocation of Computing Department costs Total costs allocated to each departmentarrow_forwardTB Problem Qu. 11-224 (Algo) Gabbe Industries is a division of a major... Gabbe Industries is a division of a major corporation. Last year the division had total sales of $23,800,000, net operating income of $2,903,600, and average operating assets of $7,000,000. The company's minimum required rate of return is 16%. Required: a. What is the division's margin? Note: Round your percentage answer to 2 decimal places. b. What is the division's turnover? Note: Round your answer to 2 decimal places. c. What is the division's return on investment (ROI)? Note: Round percentage your answer to 2 decimal places. a. Margin b. c. Return on investment, Turnover %arrow_forward
- Chapter 5 Activity-Based Costing and Management Problem 5-57 Customers as a Cost Object Morrisom National Bank has requested an analysis of checking account profitability by custom- er 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 catego- ries and their associated annual costs are as follows: Opening and closing accounts Issuing monthly statements Processing transactions Customer inquiries $ 300,000 450,000 3,075,000 0000 Providing automatic teller machine (ATM) services 600,000 Total cost 1,680,000 $6,105,000 Additional data concerning the usage of the activities by the various customers are also provided: Account Balance Low Medium High Number of accounts opened/closed 22,500 4,500 3,000 Number of statements issued 675,000 150,000 75,000 Processing transactions 27,000,000 3,000,000 750,000 Number of telephone minutes 1,500,000 900,000 600,000 Number…arrow_forwardProblem 16.31 Break-Even in Units Objective 1- Determine the number of units and amount of sales revenue needed to break even and to earn a target profit. Don Masters and two of his colleagues are considering CMA opening a law office in a large metropolitan area that would make inexpensive legal services available to those who could not otherwise afford these services. The intent is to provide easy access for their clients by having the office open 360 days per year, 16 hours each day from 7:00 a.m. to 11:00 p.m. The office would be staffed by a lawyer, paralegal, legal secretary, and clerk-receptionist for each of the two 8- hour shifts. In order to determine the feasibility of the project, Don hired a marketing consultant to assist with market projections. The results of this study show that if the firm spends $500,000 on advertising the first year, the number of new clients expected each day would have the following probability distribution: Number of New Clients per Day Probability…arrow_forwardExercise 17-18 Step-Down Method of Service Department Cost Allocation; Bank (LO 17-1) Tuscaloosa National Bank has two service departments, the Human Resources (HR) Department and the Computing Department. The bank has two other departments that directly service customers, the Deposit Department and the Loan Department. The usage of the two service departments' output for the year is as follows: Provider of Service Computing User of Service HR HR 15% Computing Deposit 10% 60% 50% Loan 30% 35% The budgeted costs in the two service departments for the year are as follows: $153,000 229,500 HR Computing Required: Use the step-down method to allocate the budgeted costs of the HR and Computing departments to the Deposit and Loan departments. Tuscaloosa National Bank allocates the costs of the HR Department first. (Do not round intermediate calculations.) Deposit Loan Allocation of HR Department costs Allocation of Computing Department costs Total costs allocated to each department $ 91,800…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
Foreign Exchange Risks; Author: Kaplan UK;https://www.youtube.com/watch?v=ne1dYl3WifM;License: Standard Youtube License