Allison Is a Recent College Graduate and Is Looking for a Bank

question 85

Essay

Allison is a recent college graduate and is looking for a bank in which to open a checking account.She has narrowed her choice to two.First National requires a $100 minimum deposit and charges 15 cents per check.City Bank requires a $500 minimum deposit,but charges only 5 cents per check.Both pay the same interest rate on the minimum deposit.Allison estimates that she will write 40 checks per month.Assuming that Allison could invest any funds not required for a minimum deposit in a one-year CD paying 6 percent,what would be the monthly cost to Allison for First National and City Bank? Which should she choose?
(a)First National -$6.00; City Bank -$2.00
(b)First National -$6.00; City Bank -$4.00
(c)First National -$6.00; City Bank -$26.00
(d)First National -$6.00; City Bank -$8.00

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Definitions:

Standard Quantities

Standard quantities refer to the predetermined amounts of material, labor, and overhead that should be used in the production of a good or service, serving as a basis for cost control and efficiency analysis.

Standard Rates

Predetermined costs or charges used for billing, budgeting, or for setting up baseline expectations for financial performance.

Standard Direct Materials Quantity

The amount of raw materials budgeted to be used in the production of goods, based on efficiency standards.

Waste And Spoilage

Materials or products that are lost, unusable, or less valuable due to inefficiencies or defects in the production process.