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Calculating ABC Unit Costs

Perkins National Bank has collected the following information for four activities and two types of credit cards:

Activity Driver Classic Gold Activity Rate ($)
Processing transactions Transactions processed 12,000 7,200 0.20
Preparing statements Number of statements 12,000 7,200 0.95
Answering questions Number of calls 24,000 36,000 4.00
Providing ATMs ATM transactions 48,000 14,400 1.50
There are 5,200 holders of Classic cards and 20,900 holders of the Gold cards.

Required:

Calculate the unit cost (rounded to the nearest cent) for Classic and Gold credit cards.

Unit cost for Classic $
Unit cost for Gold $

Answer :

Answer:

Unit cost for Classic $ 20.88

Unit cost for Gold $8.32

Explanation:

The computation of the unit cost for Classic and the Gold is shown below:

For Classic

= (12,000 × $0.20 + 12,000 × $0.95 + 24,000 × $4 + 48,000 × $1.50) ÷ (5,200 holders)

= ($2,400 + $11,400 + $22,800 + $72,000) ÷ (5,200 holders)

= ($108,600) ÷ (5,200 holders)

= $20.88

For Gold

= (7,200 × $0.20 + 7,200 × $0.95 + 36,000 × $4 + 14,400 × $1.50) ÷ (20,900 holders)

= ($1,440 + $6,840 + $144,000 + $21,600) ÷ (20,900 holders)

= ($173,880) ÷ (20,900 holders)

= $8.32

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