60.1K

Verified Solution

Link Copied!

United Savings Bank (USB) is examining the profitability of its Premier Account, a combined savings and checking account. (Click the icon to view account information.) USB recently conducted an activity-based costing study of its services. It assessed the following costs for six individual services. The use of these services in 2020 by three customers is as follows: (Click the icon to view the costs for the services and customer information.) Assume Lindell and Colston always maintain a balance above $1,000, whereas Welker always has a balance below $1,000. Read the requirements. Requirement 1. Compute the 2020 profitability of the Lindell, Welker, and Colston Premier Accounts at USB. (For amounts with a $0 balance, make sure to enter " 0 " in the appropriate cell. Round your answers to the nearest cent. Use parentheses or a minus s]gn for operating losses.) More info Depositors receive a 2% annual interest rate on their average deposit. USB earns an interest rate spread of 3% (the difference between the rate at which it lends money and the rate it pays depositors) by lending 'money for home-loan purposes at 5%. Thus, USB would gain $60 on the interest spread if a depositor had an average Premier Account balance of $2,000 in 2020($2,0003%=$60). The Premier Account allows depositors unlimited use of services such as deposits, withdrawals, checking accounts, and foreign currency drafts. Depositors with Premier Account balances of $1,000 or more receive unlimited free use of services. Depositors with minimum balances of less than $1,000 pay a \$22-a-month service fee for their Premier Account. Requirements 1. Compute the 2020 profitability of the Lindell, Welker, and Colston Premier Accounts at USB. 2. Why might USB worry about the profitability of individual customers if the Premier Account product offering is profitable as a whole? United Savings Bank (USB) is examining the profitability of its Premier Account, a combined savingstand checking account. (Click the icon to view account information.) USB recently conducted an activity-based costing study of its services. It assessed the following costs for six individual services, The use of these servicos in 2020 by three customers is as follows: (Click the icon to view the costs for the services and customer information.) Assume Lindell and Colston always maintain a balance above \$1,000, whereas Welker always has a balance below $1,000, Read the

Answer & Explanation Solved by verified expert

See Answer