Biltmore Financial is a banking services company that offers many different types of checking accounts. The bank has recently adopted an activity-based costing system to assign costs to their various types of checking accounts. The following data relate to the money market checking accounts, one of the popular checking accounts, and the ABC cost pools:
Annual number of accounts = 60,000 accounts
Checking account cost pools:
|
Cost Pool
|
Cost
|
|
Cost Drivers
|
|
Returned check costs
|
$3,000,000
|
|
Number of returned checks
|
|
Checking account reconciliation costs
|
60,000
|
|
Number of account reconciliation requests
|
|
New account setup
|
650,000
|
|
Number of new accounts
|
|
Copies of cancelled checks
|
400,000
|
|
Number of cancelled check copy requests
|
|
Online banking web site maintenance
|
195,000
|
|
Per product group (type of account)
|
|
Total checking account costs
|
$4,305,000
|
|
|
Annual activity information related to cost drivers:
|
Cost Pool
|
All Products
|
Money Market Checking
|
|
Returned check
|
200,000 returned checks
|
18,000
|
|
Check reconciliation costs
|
3,000 checking account
|
420
|
|
New accounts
|
60,000 new accounts
|
15,000
|
|
Cancelled check copy requests
|
100,000 cancelled check
|
60,000
|
|
Web site costs
|
10 types of accounts
|
1
|
Calculate the total cost assigned to the money market checking account.