case study

timer Asked: Oct 22nd, 2017
account_balance_wallet $25

Question Description

The case should have the following structure:

Summary of the Young Reader Case

Relationship of the Case to your work experience

Relationship of the Case to material covered in class.


I proved you a 3 examples of my classmates work from the different cases.

Finally, when you write about (Relationship of the Case to your work experience) I used to work at the large bank as a customer service and also I worked at a big inference company as a salesman.

Last point when you write about (Relationship of the Case to material covered in class.) we covered four chapter

1-Introduction to Managerial Accounting

2-Job Order Costing

3-Activity-Based Costing and Cost Management

4-Cost Behavior

The number of pages 4 to 5 pages.

Unformatted Attachment Preview

Case​ ​ABC​ ​Trends​ ​in​ ​the​ ​Banking​ ​Sector​ ​–​ ​A​ ​Practitioner’s Perspective Summary In​ ​the​ ​case​ ​study​ ​entitled,​ ​ABC​ ​Trends​ ​in​ ​the​ ​Banking​ ​Sector​ ​–​ ​A​ ​Practitioner’s​ ​Perspective,​ ​the author​ ​discusses​ ​the​ ​ever-changing​ ​methods​ ​of​ ​tracking,​ ​gathering​ ​and​ ​application​ ​of​ ​costing​ ​in​ ​the banking​ ​industry.​ ​ ​Costing​ ​among​ ​firms​ ​in​ ​the​ ​financial​ ​services​ ​industry​ ​has​ ​undergone​ ​a​ ​transition​ ​from traditional​ ​costing​ ​systems​ ​to​ ​activity​ ​based​ ​costing​ ​models.​ ​ ​Like​ ​most​ ​service​ ​industries,​ ​costing​ ​is​ ​an extremely​ ​cumbersome​ ​and​ ​challenging​ ​task,​ ​but​ ​as​ ​the​ ​author​ ​describes​ ​in​ ​the​ ​article,​ ​it​ ​is​ ​particularly difficult​ ​in​ ​the​ ​banking​ ​sector. There​ ​exists​ ​a​ ​culture​ ​among​ ​the​ ​investor​ ​community​ ​of​ ​imposing​ ​increasing​ ​demands​ ​on​ ​firms and​ ​their​ ​ability​ ​to​ ​grow​ ​profitability.​ ​ ​Corporate​ ​leaders​ ​manage​ ​to​ ​the​ ​profitability,​ ​cost​ ​management, overhead,​ ​and​ ​earnings​ ​of​ ​firms​ ​in​ ​an​ ​effort​ ​to​ ​deliver​ ​favorable​ ​reporting​ ​to​ ​shareholders,​ ​analysis,​ ​and other​ ​stakeholders.​ ​ ​In​ ​order​ ​to​ ​deliver​ ​favorable​ ​results​ ​aligned​ ​with​ ​stakeholder​ ​expectations,​ ​corporate executives​ ​have​ ​recognized​ ​the​ ​value​ ​that​ ​activity​ ​based​ ​costing​ ​provides​ ​to​ ​more​ ​accurately​ ​determine the​ ​costs​ ​of​ ​processes​ ​and​ ​services​ ​as​ ​they​ ​relate​ ​to​ ​each​ ​customer​ ​or​ ​transaction.​ ​ ​It​ ​has​ ​also​ ​helped​ ​them to​ ​better​ ​identify​ ​profitability​ ​strengths​ ​within​ ​various​ ​business​ ​units​ ​and​ ​more​ ​precisely​ ​identify​ ​the​ ​types of​ ​customers​ ​that​ ​are​ ​most​ ​profitable.​ ​ ​This​ ​information​ ​is​ ​critical​ ​when​ ​executives​ ​decide​ ​how​ ​to​ ​best allocate​ ​resources​ ​of​ ​the​ ​firm​ ​to​ ​market​ ​to​ ​and​ ​attract​ ​those​ ​high​ ​profit​ ​customers.​ ​ ​These​ ​advantages​ ​have caused​ ​banks​ ​to​ ​make​ ​greater​ ​technological​ ​advancements​ ​and​ ​attract​ ​more​ ​skilled​ ​labor​ ​as​ ​they​ ​pertain​ ​to the​ ​activity​ ​based​ ​costing​ ​capabilities​ ​of​ ​the​ ​firm. Activity​ ​based​ ​costing​ ​has​ ​also​ ​aided​ ​corporate​ ​leaders​ ​in​ ​their​ ​pricing​ ​decisions.​ ​ ​By​ ​determining which​ ​customers​ ​are​ ​most​ ​profitable​ ​(and​ ​which​ ​are​ ​not),​ ​executives​ ​can​ ​devote​ ​more​ ​financial​ ​and human​ ​capital​ ​to​ ​those​ ​services​ ​that​ ​profitable​ ​customers​ ​desire​ ​most.​ ​ ​Services​ ​that​ ​attract​ ​lower​ ​profit customers​ ​can​ ​be​ ​abandoned​ ​altogether​ ​or​ ​priced​ ​higher​ ​to​ ​improve​ ​margins.​ ​ ​There​ ​are​ ​many​ ​examples​ ​of these​ ​types​ ​of​ ​shifts​ ​in​ ​customer​ ​platforms​ ​taking​ ​place​ ​in​ ​the​ ​banking​ ​industry​ ​with​ ​companies​ ​like​ ​Bank of​ ​America,​ ​PNC,​ ​and​ ​Capital​ ​One​ ​to​ ​name​ ​a​ ​few. Another​ ​benefit​ ​of​ ​activity​ ​based​ ​costing,​ ​as​ ​it​ ​pertains​ ​to​ ​larger​ ​banking​ ​institutions,​ ​is​ ​the consistency​ ​in​ ​accounting​ ​models​ ​across​ ​business​ ​units​ ​within​ ​the​ ​same​ ​company.​ ​ ​The​ ​largest​ ​banks today​ ​are​ ​comprised​ ​of​ ​business​ ​units​ ​such​ ​as​ ​retail​ ​banking,​ ​residential​ ​and​ ​commercial​ ​lending,​ ​credit card​ ​services,​ ​wealth​ ​management,​ ​investment​ ​banking,​ ​underwriting,​ ​insurance​ ​and​ ​proprietary​ ​trading. Individual​ ​business​ ​units​ ​conduct​ ​their​ ​own​ ​profit​ ​and​ ​loss,​ ​and​ ​often​ ​operate​ ​as​ ​independent​ ​businesses with​ ​little​ ​integration​ ​or​ ​coordination​ ​with​ ​other​ ​units.​ ​ ​Having​ ​an​ ​activity​ ​based​ ​costing​ ​method​ ​that​ ​all lines​ ​of​ ​business​ ​integrate​ ​into​ ​their​ ​accounting​ ​operations​ ​would​ ​help​ ​to​ ​synchronize​ ​units​ ​within​ ​the​ ​firm leading​ ​to​ ​greater​ ​efficiencies,​ ​lower​ ​overhead,​ ​and​ ​more​ ​profitability. The​ ​transition​ ​from​ ​traditional​ ​costing​ ​to​ ​activity​ ​based​ ​costing​ ​is​ ​not​ ​a​ ​seamless​ ​one.​ ​ ​There​ ​are many​ ​obstacles​ ​that​ ​organizations​ ​face​ ​including​ ​time​ ​sequence​ ​of​ ​reporting,​ ​technological​ ​capabilities, integrity​ ​of​ ​data​ ​gathering​ ​and​ ​reporting,​ ​and​ ​having​ ​a​ ​costing​ ​system​ ​that​ ​can​ ​adapt​ ​to​ ​the​ ​various services​ ​offered​ ​to​ ​customers​ ​by​ ​an​ ​institution.​ ​ ​For​ ​example,​ ​ATM​ ​costs​ ​per​ ​customer​ ​are​ ​extremely difficult​ ​to​ ​assess​ ​when​ ​considering​ ​the​ ​costs​ ​of​ ​purchasing,​ ​installation,​ ​electric​ ​utility​ ​to​ ​operate,​ ​paper supplies​ ​for​ ​receipts,​ ​and​ ​ongoing​ ​maintenance.​ ​ ​It​ ​then​ ​becomes​ ​a​ ​matter​ ​of​ ​spreading​ ​the​ ​combined​ ​costs over​ ​the​ ​number​ ​of​ ​transactions​ ​per​ ​day,​ ​customers​ ​served​ ​per​ ​day,​ ​and​ ​the​ ​types​ ​of​ ​transactions.​ ​ ​This type​ ​of​ ​costing​ ​can​ ​be​ ​accurately​ ​assessed​ ​with​ ​activity​ ​based​ ​costing​ ​models​ ​or​ ​software,​ ​however,​ ​it​ ​is not​ ​straightforward​ ​to​ ​say​ ​the​ ​least. Relationship​ ​of​ ​Case​ ​to​ ​Work​ ​Experience More​ ​banks​ ​continue​ ​to​ ​enhance​ ​their​ ​costing​ ​capabilities​ ​and​ ​manage​ ​the​ ​profitability​ ​of customer​ ​relationships.​ ​ ​One​ ​company​ ​entrenched​ ​in​ ​such​ ​strategic​ ​pursuits​ ​happens​ ​to​ ​be​ ​Capital​ ​One Financial​ ​Corporation,​ ​where​ ​I​ ​currently​ ​serve​ ​as​ ​Regional​ ​Manager​ ​of​ ​its​ ​investing​ ​unit​ ​for​ ​New​ ​Jersey, New​ ​York​ ​and​ ​Connecticut.​ ​ ​Capital​ ​One​ ​is​ ​the​ ​eighth​ ​largest​ ​bank​ ​by​ ​total​ ​assets​ ​in​ ​the​ ​United​ ​States. The​ ​company​ ​employees​ ​nearly​ ​50,000​ ​associates​ ​throughout​ ​its​ ​business​ ​units​ ​which​ ​include​ ​credit​ ​card, retail​ ​bank,​ ​investing,​ ​business​ ​banking,​ ​middle​ ​market​ ​banking​ ​and​ ​lending,​ ​residential​ ​lending,​ ​and online​ ​banking.​ ​ ​Initially,​ ​the​ ​company​ ​exclusively​ ​offered​ ​credit​ ​card​ ​and​ ​merchant​ ​services​ ​to customers;​ ​but​ ​with​ ​a​ ​series​ ​of​ ​acquisitions​ ​the​ ​company​ ​has​ ​transformed​ ​over​ ​time​ ​into​ ​a​ ​full​ ​service financial​ ​institution.​ ​ ​Some​ ​notable​ ​acquisitions​ ​were​ ​ING​ ​Direct,​ ​Chevy​ ​Chase​ ​Bank,​ ​and​ ​North​ ​Fork Bank. Capital​ ​One​ ​was​ ​one​ ​of​ ​the​ ​early​ ​banks​ ​to​ ​first​ ​adapt​ ​to​ ​the​ ​changing​ ​trends​ ​in​ ​how​ ​customers​ ​bank.​ ​ ​They successfully​ ​recognized​ ​the​ ​impact​ ​these​ ​trends​ ​would​ ​have​ ​on​ ​its​ ​business​ ​and​ ​so​ ​reevaluated​ ​how​ ​it serviced​ ​its​ ​customers​ ​and​ ​for​ ​which​ ​customers​ ​it​ ​serviced.​ ​ ​One​ ​major​ ​trend​ ​in​ ​customer​ ​behavior included​ ​no​ ​longer​ ​needing​ ​to​ ​transact​ ​at​ ​a​ ​physical​ ​branch.​ ​ ​The​ ​significant​ ​decline​ ​in​ ​branch​ ​traffic​ ​is attributed​ ​to​ ​online​ ​banking​ ​capabilities​ ​and​ ​ATM​ ​services.​ ​ ​Customers​ ​increasingly​ ​conduct​ ​banking transactions​ ​online​ ​to​ ​pay​ ​bills,​ ​transfer​ ​funds,​ ​and​ ​apply​ ​for​ ​credit​ ​cards​ ​and​ ​loans.​ ​ ​ATMs​ ​allow customer​ ​to​ ​cash​ ​transact​ ​without​ ​having​ ​to​ ​get​ ​out​ ​their​ ​car​ ​or​ ​walk​ ​into​ ​a​ ​branch.​ ​ ​In​ ​light​ ​of​ ​these changing​ ​behaviors,​ ​Capital​ ​One​ ​has​ ​made,​ ​and​ ​is​ ​in​ ​the​ ​process​ ​of​ ​making,​ ​shifts​ ​in​ ​their​ ​strategy​ ​to focus​ ​efforts​ ​on​ ​servicing​ ​the​ ​needs​ ​of​ ​profitable​ ​customers​ ​as​ ​well​ ​as​ ​operational​ ​adjustments​ ​derived from​ ​cost​ ​management​ ​analysis.​ ​ ​These​ ​measures​ ​included​ ​branch​ ​closures,​ ​branch​ ​transformations, increased​ ​focus​ ​on​ ​customer​ ​service,​ ​and​ ​technology​ ​investments​ ​and​ ​enhancements.​ ​ ​We​ ​will​ ​now analyze​ ​these​ ​measures​ ​in​ ​greater​ ​detail. Capital​ ​One​ ​realized​ ​that​ ​branches​ ​with​ ​high​ ​foot​ ​traffic​ ​and​ ​large​ ​transaction​ ​volumes​ ​(deposits, withdrawals,​ ​loan​ ​payments,​ ​etc.)​ ​did​ ​not​ ​generate​ ​sufficient​ ​revenues​ ​to​ ​justify​ ​the​ ​high​ ​costs​ ​associated with​ ​maintaining​ ​and​ ​operating​ ​the​ ​branch.​ ​ ​The​ ​costs​ ​associated​ ​with​ ​operating​ ​a​ ​bank​ ​branch​ ​include rent,​ ​direct​ ​labor​ ​(tellers​ ​and​ ​bankers),​ ​indirect​ ​labor​ ​(manager),​ ​utilities,​ ​supplies,​ ​and​ ​miscellaneous expenses.​ ​ ​The​ ​company​ ​found​ ​that​ ​the​ ​high​ ​transaction​ ​customers​ ​predominantly​ ​domiciled​ ​in​ ​these branches,​ ​did​ ​not​ ​have​ ​the​ ​need​ ​for​ ​more​ ​profitable​ ​services​ ​the​ ​bank​ ​offered​ ​such​ ​as​ ​auto​ ​lending,​ ​home lending,​ ​collateralized​ ​credit,​ ​financial​ ​advisory,​ ​and​ ​business​ ​banking.​ ​ ​The​ ​bank​ ​ultimately​ ​decided​ ​to permanently​ ​close​ ​these​ ​branches.​ ​ ​Upon​ ​such​ ​branch​ ​closures,​ ​the​ ​bank​ ​observed​ ​that​ ​most​ ​of​ ​the​ ​high transaction​ ​customers​ ​decided​ ​to​ ​close​ ​their​ ​accounts,​ ​whereas​ ​the​ ​high​ ​balance​ ​low​ ​transaction​ ​customers (high​ ​profit​ ​customers)​ ​maintained​ ​their​ ​relationship​ ​with​ ​the​ ​bank​ ​even​ ​though​ ​the​ ​accounts​ ​had​ ​been redomiciled​ ​to​ ​another​ ​branch.​ ​ ​In​ ​conclusion,​ ​the​ ​result​ ​of​ ​the​ ​branch​ ​closures​ ​was​ ​a​ ​reduction​ ​in​ ​the bank’s​ ​costs​ ​and​ ​removal​ ​of​ ​a​ ​customer​ ​segment​ ​it​ ​had​ ​little​ ​incentive​ ​to​ ​continue​ ​serving,​ ​all​ ​while retaining​ ​the​ ​high​ ​profit​ ​customers. ​ ​As​ ​for​ ​other​ ​branches​ ​that​ ​did​ ​not​ ​have​ ​high​ ​transaction/low​ ​profit​ ​customers​ ​and​ ​instead​ ​served​ ​mostly low​ ​transaction/high​ ​profit​ ​customers,​ ​Capital​ ​One​ ​determined​ ​that​ ​the​ ​optimal​ ​strategy​ ​would​ ​be​ ​a​ ​branch transformation​ ​rather​ ​than​ ​a​ ​branch​ ​closure.​ ​ ​These​ ​branches​ ​would​ ​come​ ​to​ ​be​ ​known​ ​as​ ​Select​ ​Service branches.​ ​ ​These​ ​branches​ ​are​ ​cashless​ ​and​ ​typically​ ​limited​ ​to​ ​two​ ​bankers​ ​on​ ​the​ ​platform.​ ​ ​They​ ​found that​ ​these​ ​customers​ ​typically​ ​utilized​ ​the​ ​branch​ ​to​ ​meet​ ​with​ ​bankers,​ ​financial​ ​advisors,​ ​business bankers​ ​and​ ​loan​ ​officers.​ ​ ​Cash​ ​transactions​ ​are​ ​minimal​ ​and​ ​so​ ​there​ ​is​ ​no​ ​need​ ​for​ ​tellers.​ ​ ​The​ ​Select Service​ ​branch​ ​allows​ ​the​ ​bank​ ​to​ ​eliminate​ ​the​ ​direct​ ​labor​ ​costs​ ​associated​ ​with​ ​teller​ ​labor,​ ​having​ ​one manager​ ​manage​ ​multiple​ ​branches,​ ​and​ ​service​ ​high​ ​profit​ ​customers​ ​in​ ​the​ ​ways​ ​those​ ​customers​ ​want to​ ​be​ ​serviced. At​ ​the​ ​start​ ​of​ ​2017,​ ​Capital​ ​One​ ​rolled​ ​out​ ​a​ ​new​ ​metric​ ​of​ ​how​ ​it​ ​would​ ​rate​ ​the​ ​performance​ ​of​ ​all associates​ ​in​ ​its​ ​lines​ ​of​ ​business.​ ​ ​The​ ​metric​ ​is​ ​known​ ​as​ ​Net​ ​Promoter​ ​Score​ ​(NPS)​ ​and​ ​is​ ​the​ ​sole measurement​ ​the​ ​company​ ​uses​ ​to​ ​verify​ ​whether​ ​or​ ​not​ ​the​ ​company​ ​mission​ ​was​ ​being​ ​delivered​ ​to​ ​its customers.​ ​ ​The​ ​Net​ ​Promoter​ ​Score​ ​gages​ ​the​ ​customer’s​ ​experience,​ ​the​ ​associate’s​ ​demeanor​ ​and competencies,​ ​overall​ ​customer​ ​satisfaction,​ ​and​ ​most​ ​importantly​ ​whether​ ​the​ ​customer​ ​would​ ​refer Capital​ ​One​ ​to​ ​friends​ ​and​ ​family.​ ​ ​The​ ​Net​ ​Promoter​ ​Score​ ​is​ ​Capital​ ​One’s​ ​customer​ ​relationship management​ ​system,​ ​which​ ​helps​ ​the​ ​company​ ​collect​ ​customer​ ​profitability​ ​information​ ​along​ ​with​ ​other internal​ ​tracking​ ​systems. Relationship​ ​of​ ​Case​ ​to​ ​Material​ ​Covered Activity​ ​based​ ​costing​ ​is​ ​clearly​ ​the​ ​optimal​ ​method​ ​for​ ​banks​ ​to​ ​assign​ ​the​ ​multitude​ ​of​ ​indirect​ ​costs​ ​to the​ ​services​ ​offered​ ​based​ ​on​ ​the​ ​activities​ ​those​ ​services​ ​require.​ ​ ​The​ ​information​ ​that​ ​activity​ ​based costing​ ​provides​ ​executives​ ​with​ ​the​ ​clarity​ ​of​ ​precise​ ​costs​ ​associated​ ​with​ ​the​ ​activities​ ​to​ ​deliver services,​ ​and​ ​the​ ​ability​ ​to​ ​apply​ ​that​ ​data​ ​to​ ​improve​ ​company​ ​performance​ ​through​ ​operational​ ​changes, cost​ ​reductions,​ ​and​ ​activity​ ​reductions​ ​(as​ ​we​ ​saw​ ​in​ ​the​ ​case​ ​with​ ​Capital​ ​One). The​ ​real​ ​challenge​ ​with​ ​activity​ ​based​ ​costing​ ​is​ ​the​ ​differentiation​ ​of​ ​business​ ​models​ ​within​ ​the organization.​ ​ ​Determining​ ​the​ ​time​ ​sequence​ ​is​ ​also​ ​a​ ​variable​ ​that​ ​may​ ​differ​ ​among​ ​business​ ​units within​ ​a​ ​company.​ ​ ​Once​ ​these​ ​items​ ​are​ ​addressed,​ ​the​ ​benefits​ ​of​ ​activity​ ​based​ ​costing​ ​for​ ​banks​ ​result in​ ​significantly​ ​improved​ ​data​ ​accuracy​ ​and​ ​better​ ​insight​ ​into​ ​customer​ ​profitability​ ​and​ ​the​ ​selection​ ​of optimal​ ​platforms.​ ​ ​Activity​ ​based​ ​costing​ ​in​ ​the​ ​financial​ ​services​ ​industry​ ​helps​ ​large​ ​corporations manage​ ​their​ ​costs​ ​across​ ​multiple​ ​business​ ​units​ ​more​ ​efficiently​ ​and​ ​accurately.​ ​ ​Furthermore,​ ​the costing​ ​method​ ​also​ ​increases​ ​a​ ​company’s​ ​ability​ ​to​ ​focus​ ​on​ ​high​ ​profit​ ​activities​ ​and​ ​service​ ​high​ ​profit customers. Summary Today,​ ​banks​ ​devote​ ​increasing​ ​amounts​ ​of​ ​financial​ ​capital​ ​to​ ​technological​ ​investments​ ​in​ ​activity​ ​based costing​ ​systems​ ​and​ ​processes.​ ​ ​Corporate​ ​leaders​ ​of​ ​the​ ​largest​ ​banks​ ​in​ ​the​ ​country​ ​recognize​ ​that​ ​such focus​ ​is​ ​pivotal​ ​to​ ​their​ ​survival​ ​with​ ​the​ ​rapidly​ ​changing​ ​needs​ ​of​ ​customers,​ ​broadening​ ​of​ ​banking capabilities,​ ​and​ ​rising​ ​investor​ ​demand.​ ​ ​As​ ​each​ ​bank​ ​has​ ​its​ ​own​ ​operational​ ​complexities​ ​and challenges,​ ​the​ ​ability​ ​to​ ​attract​ ​and​ ​train​ ​skillful​ ​engineers​ ​and​ ​accountants​ ​is​ ​equally​ ​as​ ​critical​ ​to​ ​the bank’s​ ​longevity.​ ​ ​Regardless​ ​of​ ​the​ ​financial​ ​services​ ​institution​ ​and​ ​its​ ​business​ ​model,​ ​there​ ​i ...
Purchase answer to see full attachment

Tutor Answer

School: Cornell University


Rethinking Activity-Based Costing –Outline
Thesis: The opportunities that the organizations face in the use of the costing methods helps in
ensuring that there is focus on the capacities of the operation of the firms and the estimation of
the different drivers in the cost process.

A. Resource management
B. Cost estimation


Relationship of the Case to Your Work Experience
A. Cost allocation to customers
B. Process streamlining


Relationship of the Case to Material Covered in Class

A. Safe assignment
B. Challenge analysis


Rethinking Activity-Based Costing




Rethinking Activity-Based Costing
In rethinking Activity Based costing case, there is a need for the managers in the
organization to focus on the measures that help in the assigning of the costs to the products and
the customers. The implementation of ABC costing in the large manufacturing companies is
difficult, and this results in the need to focus on the solutions that guide the implementation of
the concept of ABC. The need for the accuracy of the accounting of the costs helps in the
improvement of the relationships with the clients, and this creates the opportunities for the
expansion and the profitability of the businesses. The opportunities that the organizations face in
the use of the costing methods helps in ensuring that there is focus on the capacities of the
operation of the firms and the estimation of the different drivers in the cost process.
The rethinking of the ABC method is to ensure that there us accuracy in the estimating of
the capacities of the organization and this involves the practicality of the allocation of the costs
per employee. The activities that the employees engage and the observation of the time that they
spend in the performing of the activities are important to account for, and this is not possi...

flag Report DMCA

awesome work thanks

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors