Rock Solid Bank and Trust (RSB&T) offers only checking accounts. Customers can write checks and...
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Accounting
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 6.00 percent annually on its investments of those deposits. To compete with larger banks, RSB&T pays depositors 0.60 percent on all deposits. A recent study classified the banks annual operating costs into four activities:
Activity
Cost Driver
Cost
Driver Volume
Using ATM
Number of uses
$
1,725,000
2,300,000
uses
Visiting branch
Number of visits
845,000
169,000
visits
Processing transaction
Number of transactions
7,304,000
83,000,000
transactions
Managing functions
Total deposits
7,050,000
$
470,000,000
in deposits
Total overhead
$
16,924,000
Data on two representative customers follow:
Customer A
Customer B
ATM uses
270
320
Branch visits
7
19
Number of transactions
50
2,400
Average deposit
$
7,900
$
7,900
b. Compute the profit from customer A and customer B assuming that customer costs are based only on deposits. Interest costs 0.60 percent of deposits; operating costs are 5 percent of deposits (Do not round intermediate calculations. Round your answers to 2 decimal places. Customer B
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