The bank incurred m either types of different be from its debit wit business. Each comprise under the pecuniary accounting code needs to be identified whether its protean or fixed ground on the constitute behavior. If a cost changes in direct proportion to the change in spate of activity, the cost is variable. If a cost remains unchanged as the volume of activity changes, the cost is fixed. Based on this definition, from each one cost was identified accordingly (see Analysis- towboat 6).
Cost per “cardholder” and Cost per “signatured transaction”
Total cost per cardholder based on the cost behavior was $1.76 and come in cost per signatured transaction was $0.29 (see Analysis- Column 7 and 10). Since management’s internal target of cost per cardholder for the month was no more than $1.97, the calculated cost per cardholder of $1.76 was below the management’s internal target threshold. Therefore, the management big businessman need to reconsider whether the original internal target was overestimated by the comparison of $1.76 vs. $1.97.
Alternative analysis
The total cost per cardholder of $1.76 was calculated based upon the number of cardholders.
However, the component of variable be might convey been undervalued because of the number of inactive cardholders. Those inactive cardholders would not affect any variable costs associated with the change in a volume of card transactions. The fixed cost portion of total cost per cardholder remained the same whether the cardholders are active or inactive. The bank salaried one-time or regular monthly flat fees to run the debit card business regardless of a volume of card transactions. Therefore, in order to calculate the variable portion of the total cost per cardholder more accurately, we propose the management to calculate each variable cost per only “active” cardholder. Variable costs incurred as a volume of transactions associated with the card usage...If you wish to get a full essay, order it on our website: Ordercustompaper.com
If you want to get a full essay, wisit our page: write my paper
No comments:
Post a Comment