Pilot Bank Uses Activity-Based Costing The Above Activities Are Used by Downtown Branch and North

question 57

Essay

Pilot Bank uses activity-based costing.Pilot Bank has the following activities,traceable costs,and cost drivers:
$\begin{array}{lll}\text { Activities }&\text { Traceable Costs }&\text { Cost Drivers }\\\hline\text { Open new accounts } & \$ 40,000 & 1,000 \text { accounts } \\\text { Process deposits } & \$ 72,000 & 360,000 \text { deposits } \\\text { Process withdrawals } & \$ 100,000 & 200,000 \text { withdrawals }\end{array}$
The above activities are used by Downtown branch and North branch as follows:
$\begin{array}{lll}\text { Activities }&\text { Downtown}&\text { North }\\\hline\text { Open new accounts } & 200 & 400 \\\text { Process deposits } & 40,000 & 20,000 \\\text { Process withdrawals } & 15,000 & 18,000 \\\end{array}$
Required:
A) Compute the new account cost assigned to the North branch.
B) Compute the deposit processing cost assigned to the Downtown branch.
C) Compute the withdrawal processing cost assigned to the Downtown branch.

• A) Compute the new account cost assigned to the North branch.
• B) Compute the deposit processing cost assigned to the Downtown branch.
• C) Compute the withdrawal processing cost assigned to the Downtown branch.

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Definitions:

New Equity

Funds raised by a company through the issuance of common stock to the public or private investors.

Quarterly Dividend

A dividend payment made by a company to its shareholders four times a year, typically every three months.

Flotation Costs

The costs associated with issuing new securities, including underwriting, legal, and registration fees, which are incurred by a company when it issues new stocks or bonds.

New Equity

Refers to the issuance of shares by a company to raise capital, which dilutes existing ownership but can provide funds for expansion or debt reduction.