Reference no: EM132752948
Question: 1. What are the current problems, if any, that Buckeye National Bank (BNB) appears to be facing?
2. Based on your understanding of cost system failure, do you think that the problems that BNB is facing are due to the cost system's feedback? If yes, explain clearly why that is the case
3.(a) Using the traditional (current) accounting system, what are the costs of servicing an average retail and business customer? Also, determine the profit per customer in each of the two groups. (b) What business strategy would a manager using the original cost allocation system likely adopt?
4. What are the major cost pools the Bank has identified under the new Activity-based costing system? What transactions are used to absorb the cost of each activity at a given customer group level?
5. (a) Using the Activity-based costing (ABC) system, what are the costs of servicing an average retail and business customer? Also, determine the profit per customer in each of the two groups.
6. Clearly explain the reason for the differences, if any, between the ABC and the traditional views of profitability of an average customer in the two groups.
7. Activity-based management (ABM) refers to managers' use of ABC data in making business decisions. How can Buckeye's managers use the ABC data to plan more profitable marketing strategies? How can Buckeye's managers use ABC information to identify opportunities to trim costs while still satisfying customers' needs?
8. Assume that the depreciation expense on the customer call center equipment is $40,000. An outsourcing company offers to provide the same level (i.e., attending 100,000 calls a year) and quality of service for $480,000. Should the bank outsource its call center service based on just these numbers and the other data given in the case? You may ignore the qualitative and long-term concerns related to outsourcing and view this as a single-shot decision.
9. Suppose that the variable portion of servicing one retail customer is $4 (under the new Activity-Based-Costing system). If the bank responds to the new customer profitability numbers by letting one retail customer go, by how much would its total income for the year change?
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