Bank have variety of product, such as savings accounts, checking accounts, certificates of deposit (CDs), and loans. Assume that you were assigned the task of determining the administrative costs of “savings accounts” as a complete product line. What are some of the activities associated with savings accounts? In answering this question, consider the activities that you might perform with your savings account. For each activity, what would be an activity base that could be used to allocated savings account. For each activity, what would be an activity base that could be used to allocate the activity cost to the saving account product line?

Question:

Bank have variety of product, such as savings accounts, checking accounts, certificates of deposit (CDs), and loans. Assume that you were assigned the task of determining the administrative costs of “savings accounts” as a complete product line. What are some of the activities associated with savings accounts? In answering this question, consider the activities that you might perform with your savings account. For each activity, what would be an activity base that could be used to allocated savings account. For each activity, what would be an activity base that could be used to allocate the activity cost to the saving account product line?

Answer:

Students may arrive at a variety of possible activities and activity bases. Below is a representative list.

Activity                                                                 Activity Base                                          

Opening an account                                            Number of accounts opened

Teller deposit transaction                                  Number of teller deposits

Teller withdrawal transaction                            Number of teller withdrawals

ATM withdrawal transaction                              Number of ATM withdrawals

ATM deposit transaction                                    Number of ATM deposits

Online bill pay                                                       Number of online bill pay transactions

Providing a monthly statement                         Number of statements

Direct deposit transaction                                  Number of direct deposits

Making a correction                                             Number of corrections

Providing a balance                                             Number of balance inquiries

Electronic funds transfer (EFT)                          Number of EFT transactions

Closing an account                                               Number of accounts closed