Can you help me with this problem? Thank you! Seattle Bank’s start-up division e
ID: 2584158 • Letter: C
Question
Can you help me with this problem?
Thank you!
Seattle Bank’s start-up division establishes new branch banks. Each branch opens with three tellers. Total teller cost per branch is $96,000 per year. The three tellers combined can process up to 90,000 customer transactions per year. If a branch does not attain a volume of at least 60,000 transactions during its first year of operations, it is closed. If the demand for services exceeds 90,000 transactions, an additional teller is hired and the branch is transferred from the start-up division to regular operations
Determine the amount of teller cost in total and the average teller cost per transaction for a branch that processes 60,000, 70,000, 80,000, or 90,000 transactions. In this case (the activity base is the number of transactions for a specific branch), is the teller cost a fixed or a variable cost? (Round "Average per unit teller cost" to 2 decimal places.)
Determine the amount of teller cost in total and the average teller cost per branch for Seattle Bank, assuming that the start-up division operates 10, 15, 20, or 25 branches. In this case (the activity base is the number of branches), is the teller cost a fixed or a variable cost?
Explanation / Answer
solution:
Number of transactions
The teller cost is a variable cost [ the teller cost changes, when there is a change in no.of transactions. so, it is called as variable cost ].
* no.of transactions of a teller per annum = 90000 / 3 = 30000
* teller cost per transaction per annum = 96000 / 30000 = 3.2
20
The teller cost is fixed cost [ Teller cost per branch is fixed (96,000), total teller cost is changed when there is an increase in no.of branches ].
*Here teller cost per branch = teller cost per annum.
Number of transactions
60000 70000 80000 90000 Total teller cost 64000 74666.66 85333.33 96000 Average per unit teller cost 3.2 3.2 3.2 3.2