Asked on 4 Nov 2017

EXERCISE 7-8 Computing and Interpreting Activity Rates [LO7-3] (This exercise is a continuation of Exercise 7–7; it should be assigned only if Exercise 7-7 is also assigned.) The manager of the Westfield branch of Security Home Bank has provided the follow- ing data concerning the transactions of the branch during the past year: Total Activity at the Westfield Branch Activity Opening accounts ......... Processing deposits and withdrawals ..... Processing other customer transactions ... 500 new accounts opened 100,000 deposits and withdrawals processed 5,000 other customer transactions processed The lowest costs reported by other branches for these activities are displayed below: Lowest Cost among All Security Home Bank Branches Activity Opening accounts ..................... Processing deposits and withdrawals ...... Processing other customer transactions .... $26.75 per new account $1.24 per deposit or withdrawal $11.86 per other customer transaction Required: 1. Using the first-stage allocation from Exercise 7-7 and the above data, compute the activity rates for the activity-based costing system. (Use Exhibit 7-7 as a guide.) Round all computa- tions to the nearest whole cent. 2. What do these results suggest to you concerning operations at the Westfield branch?

Answered on 4 Nov 2017

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