Question

In: Accounting

Golding Bank provided the following data about its resources and activities for its checking account process:


Assigning Cost of Resources to Activities, Unbundling the General Ledger

Golding Bank provided the following data about its resources and activities for its checking account process:

Resources


ActivitiesClerical Hours
Supervision
$72,000
Processing accounts
10,360
Phone and supplies
91,000
Issuing statements
7,000
Salaries
280,000
Processing transactions
7,840
Computer
30,000
Answering customer inquiries
2,800
      Total
$473,000
      Total
28,000

  • Computers are used only by the issuing (20 percent) and processing transaction (80 percent) activities.

  • Phone and supplies are 70 percent customer inquiries with the other 30 percent divided equally among the remaining activities, including supervising the checking operation.

  • The supervisor spends 100 percent of his time on supervision. In addition to the 28,000 clerical hours, there are 2,000 hours of supervision used (the hours used by the supervising clerks activity, which is not listed above).

Required:

1. Prepare a work distribution matrix for the five primary activities. If an answer is zero, enter "0".


Golding Bank
Percentage of Time on Each Activity
ActivitySupervisorClerks
Supervising clerks%%
Processing accounts

Issuing statements

Processing transactions

Answering customer inquiries


1. A work distribution matrix simply identifies the Amount of labor consumed by each activity. The supervising ratio is given. The remaining four ratios are calculated using the clerical hrs. ÷ total processing hours

2. Calculate the cost of each activity. If required, round your answers to the nearest dollar.

ActivityTotal
Supervising clerks$
Processing accounts$
Issuing statements$
Processing transactions$
Answering customer inquiries$

3. If the cost of the supervising activity is assigned to the other four activities, what is the final cost of these four primary activities? If required, round your answers to the nearest dollar.

Processing accounts$
Issuing statements$
Processing transactions$
Answering customer inquiries$

Solutions

Expert Solution

1.) Work distribution matrix for five primary activities.

Activity Supervisor Clerks Supporting calculation
Supervision 100% 0% (2000/2000)
Processing accounts 37% (10360/28000)
Issuing Statements 25% (7000/28000)
Processing transactions 28% (7840/28000)
Answering customer inquires 10% (2800/28000)

2.) Cost of each activity

Activities Computer Phone and supplies Supervision & salaries Total
Supervision 6825 72000 78825
(91000*30%)/4
Processing accounts 6825 103600 110425
(91000*30%)/4 280000*37%
Issuing statements 5600 6825 70000 82425
28000*20% (91000*30%)/4 280000*25%
Processing transactions 22400 6825 78400 107625
(28000*80%) (91000*30%)/4 (280000*28%)
Answering customer inquires 63700 28000 91700
(91000*70%) (280000*10%)

3.) Supervision is a secondary activity and its costs are consumed by primary activities.

Primary Cost Secondary Cost Total Cost
Processing accounts 110425 29165.25 139590.25
(78825*37%)
Issuing statements 82425 19706.25 102131.25
(78825*25%)
Processing transactions 107625 22071 129696
(78825*28%)
Answering customer inquires 91700 7882.5 99582.5
(78825*10%)

ekkarill92 answered 2 years ago
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