Calculate the overhead cost per account for the Money Market Checking

Nov 27th, 2015
Business & Finance
Price: $5 USD

Question description

Baller Financial is a banking services company that offers many different types of checking accounts. The bank has recently adopted an activity-based costing system to assign costs to their various types of checking accounts. The following data relate to the money market checking accounts, one of the popular checking accounts, and the ABC cost pools: 
Annual number of accounts = 51,000 accounts  Checking account cost pools:

Cost PoolCostCost Drivers
Returned check costs$2,900,000Number of returned checks
Checking account reconciliation costs56,000Number of account reconciliation requests
New account setup647,000Number of new accounts
Copies of cancelled checks385,000Number of cancelled check copy requests
Online banking web site maintenance184,000Per product group (type of account)

Annual activity information related to cost drivers:

Cost PoolAll ProductsMoney Market Checking
Returned check194,,000 returned checks
Check reconciliation costs385,000 checking account
New accounts54,000 new accounts
Cancelled check copy requests94,000 cancelled check
Web site costs4 types of accounts

Calculate the overhead cost per account for the Money Market Checking

Tutor Answer

(Top Tutor) Daniel C.
School: UCLA

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Nov 27th, 2015
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