Question

5. Activity-based costing for a service business Obj. 6 Draper Bank uses activity-based costing to determine the cost of servicing customers. There are three activity pools: teller transaction processing, check processing, and ATM transaction processing. The activity rates associated with each activity pool are $3.50 per teller transaction, $0.12 per canceled check, and $0.10 per ATM transaction. Draper Bank had 12 teller transactions, 100 canceled checks, and 20 ATM transactions during the month. Determine the total monthly activity- based cost for Draper Bank during the month.

Answer 1

The total monthly activity-based cost for Draper Bank is $56.

Step-by-step explanation:

The total monthly activity-based cost for Draper Bank can be calculated by multiplying the activity rates with the respective number of transactions in each activity pool. For teller transaction processing, the cost would be $3.50 multiplied by 12 teller transactions, which equals $42. For check processing, the cost would be $0.12 multiplied by 100 canceled checks, resulting in $12.

Finally, for ATM transaction processing, the cost would be $0.10 multiplied by 20 ATM transactions, totaling $2. Therefore, the total monthly activity-based cost for Draper Bank is $42 + $12 + $2 = $56.