Our case study is on the Columbia City Bank. First of all we would like to talk about the general inner workings of a bank. A bank generates a profit from the differential between the level of interest it pays for deposits and other sources of funds, and the level of interest it charges in its lending activities. In recent history, investors have demanded a more stable revenue stream and banks have therefore placed more emphasis on transaction fees, primarily loan fees but also including service charges on an array of deposit activities and ancillary services. Lending activities, however, still provide the bulk of a commercial bank's income. Beside, Banks make money from card products through interest payments and fees s costs:
Activity: Teller salaries: RM 1200 000
Total Teller transaction costs: RM 1200 000
Allocation rate for teller transactions:
Total teller transaction costs/ total number of teller transactions
RM 1200 000/400 000 = RM 3 per teller transaction
Customer service call center, activity rate is the number of calls
Retail Customers: 95,000
Business Customers: 5000
Total number of customer calls to all centers: 100,000
Costs of customer calls to call retailers:-
Activity: Tall-Free phone lines at customer call center: RM60,000
Salaries and customer's representation at call center: RM450,000
Total cost of customer calls to call center: RM510,000
Allocation rate for customer service call center:
Total costs of customer calls to call center / Total number of customer calls
RM510,000/100,000 = RM5.10 per customer call to call center
3B)
|Activity |ABC rate |Total Indirect Cost Assigned to |Total Indirect Cost Assigned to | | | |Retail Customer line |Business Customer line | |Check Payments |RM0.10 |2,280,000 x RM0.10 =RM228,000 |9,120,000 x RM0.10 =RM921,000 | |Teller Withdrawal and Deposits |RM3.00
Case #3 Discussion Questions 1. After carefully analyzing the advantages of basing a suppliers overall evaluation on its lowest performance on one of the five dimensions (Quality, Delivery, Cost Management, Technical Support and Wavelength), I have come up with the conclusion that it points out a direct weakness that the supplier has, which most likely is filterable. It also lets you see other options that could be employed for different performance directions if needed. This as well assists…
overlook project cost management and how this might affect completing projects within budget. Many information technology professionals have a poor attitude toward project cost management because they have had bad experiences in the past, they think it is a job for accountants or someone who deals with money and not them. This negative attitude contributes to the poor track record of completing projects within budget. 2. Explain some of the basic principles of cost management, such as profits…
Cost Management Plan The risk management tool that I would like to discuss is the cost management plan. The definition according to PMBOK is “a document that sets out the format and establishes the activities and criteria for planning, structuring, and controlling the project costs”. The cost management plan is often packaged inside of a larger project management plan which will demonstrate how to effectively control and execute the overall strategy. The cost management plan may be formal or…
of Project Cost Management According to an accounting textbook, cost is defined as a resource sacrificed or foregone to achieve a specific objective. It is something given up in exchange. It is necessary for project managers to understand project cost management since project costs money and consumes resources. There are reasons for project cost overrun and these are as follows: * Not emphasizing the importance of realistic project cost estimates from the outset. IT project cost estimates…
Good evening ladies, gentleman and esteemed guest, for those of you who don’t know who I am I’m Aaron. Jacobs life mentor and hero, everything good about Jacob he got from me everything else that is bad he probably got from Danielle. Jacob has always looked up to me, thus tried to emulate me in every way hairstyle, his healthy eating life style and my good Christian values. The first time I met Jacob was in the summer of 2010, back then I had a Jedi’s rat’s tail which I proudly displayed to…
Costs and Benefits Bryant & Stratton College Today we will talk about the cost and benefits for getting new laptop’s for Election management bodies (EMBs). This packet will include the initial costs of purchasing new hardware and software, the hiring of consultants to set up the new system. Also the costs for maintenance and management costs to keep the laptop’s running. This will show you why we need new laptops. The process of getting new laptops is for the new technology that would…
ACCT7107 ACCT7107 MANAGEMENT ACCOUNTING AND CONTROL DISCUSS BRIDGETON INDUSTRIES ACF AND THE CASE APPROACH Background Identify/define the problems and issues Analysis to support the problems and issues you have identified Lecture 4: Cost system refinement II: Activity-based costing; Process Costing Quantitative? Qualitative? Recommendations: Alternative actions/recommendations that come out of your analysis and what is your preferred action plan?…
Evaluate the role of cost leadership and product/service differntiation in establishing and maintaining a Sustainable Competitive Advantage. Cost leadership is a strategy used to create a low cost of operation within the niche. This approach involves aiming to have the lowest cost in the market but at the same time having the highest profits. Therefor customers are buying goods for a better price but at the same time the business is making a profit so it suits both parties.In order to use this…
Introduction to Financial and Management Accounting Decentralization and the Different Types of Business Centres Decentralization and the Different Types of Business Centres Learning Outcomes • • • • • Understand Decentralization Identify cost, investment, and profit centres, Classify Service Centres, Explain Transfer Pricing, and Understand how to measure performance in each. Context Many organizations today are decentralized. This means that day-to-day operational decisions are made not by…