Question

Coastal Bank uses activity-based costing to determine the cost of servicing customers. There are three activity pools: teller transaction processing ($2. 80 per teller transaction), check processing ($0. 25 per canceled check), and ATM transaction processing ($0. 20 per ATM transaction).

Jacki Marshall had 4 teller transactions, 12 canceled checks, and 9 ATM transactions during the month. Determine the total monthly activity-based cost for Jacki Marshall during the month.
a. $16.00
b. $116.80
c. $14.38
d. $43.00

Answer 1

Answer: The total activity based cost for Jacki Marshall during the month is $16 (option A).

We arrive at the total cost for each of Jacki's activities as follows:

`Cost of Teller Transactions = Cost per transaction * Number of transactions`

`Cost of Teller Transactions = 2.80 * 4 = 11.20`

`Cost of Cancelled Checks = Cost per cancelled checks* Number of transactions`

`Cost of Cancelled Checks = 0.25* 12 = 3`

`Cost of ATM transactions = Cost per ATm transaction * Number of transactions`

`Cost of ATM transactions = 0.20 * 9 = 1.80`

`Total cost for Jacki Marshall = 11.2 + 3 + 1.8 = 16`