The First National Bank has a mortgage loan office with conversion cost of $73,950 per month.

Problem 12-21

The First National Bank has a mortgage loan office with conversion cost of $73,950 per month. There are five employees who each work 170 hours per month. Last month, 1,020 loan applications were processed, but the staff believes that system improvements could lead to the processing of as many as 1,700 per month.

Calculate the following. If required, round your answers to two decimal places.

A. Conversion cost in minutes.
$ per minute

B. Theoretical conversion cost per unit.
$ per application

C. Actual conversion cost per unit.
$ per application

D. How much more is the department spending per application than it should be if perfect efficiency could be attained?
$

Solutions

Expert Solution

Calculation of the Following:

A. Conversion Cost in Minutes:

B. Theoretical Conversion Cost Per Unit:

C. Actual Conversion Cost Per Unit:

D. The Department is Spending $29 ($72.50 - $43.50) more per application than it should be.

ekkarill92 answered 1 year ago

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