Question

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				Activities	Clerical Hours
Supervision		$80,000		Processing accounts		9,360
Phone and supplies		95,000		Issuing statements		4,800
Salaries		265,000		Processing transactions		6,720
Computer		23,000		Answering customer inquiries		3,120
Total		$463,000		Total		24,000

• 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 24,000 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
Activity	Supervisor	Clerks
Supervising clerks	%	%
Processing accounts
Issuing statements
Processing transactions
Answering customer inquiries

Feedback

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.

Activity	Total
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	$

Answer 1

1.

Golding Bank
Percentage of Time on Each Activity
Activity	Supervisor	Clerks
Supervising clerks (2000/2000)	100%	0%
Processing accounts (9360/24000)	0%	39%
Issuing statements (4800/24000)	0%	20%
Processing transactions (6720/24000)	0%	28%
Answering customer inquiries (3120/24000)	0%	13%

2.

Activity	Total
Supervising clerks	$                 44
Processing accounts	$                 12
Issuing statements	$                 13
Processing transactions	$                 15
Answering customer inquiries	$                 32

Working:

	Activities
Resources	Supervising clerks	Processing accounts	Issuing statements	Processing transactions	Answering customer inquiries	Total
Supervision	80000	0	0	0	0	80000
Phone and supplies (30% x 95000/4);(70% x $95000)	7125	7125	7125	7125	66500	95000
Salaries (39%, 20%, 28%, 13%)	0	103350	53000	74200	34450	265000
Computer (20%,80%)	0	0	4600	18400	0	23000
Total	87125	110475	64725	99725	100950	463000
Divide by number of hours	2000	9360	4800	6720	3120
Cost of each activity $	44	12	13	15	32

3.

Processing accounts	$     144,454
Issuing statements	$ 82,150
Processing transactions	$     124,120
Answering customer inquiries	$     112,276

Working:

	Processing accounts	Issuing statements	Processing transactions	Answering customer inquiries	Total
Activity costs	110475	64725	99725	100950	375875
Allocation of cost of supervising activity (39%, 20%, 28%, 13%)	33979	17425	24395	11326	87125
Total	144454	82150	124120	112276	463000