Reference no: EM132648799
Semona Bank would like to determine the price to charge for customer services and which classes of customers should be emphasized or de-emphasized. It has provided details of the activities and the cost drivers relating to those expenses that can be attributed to customers as follows:
Activity Activity costs
(R) Activity driver Activity volume
Providing ATM services 400,000 Number of transactions 200,000
Computer processing 1,300,000 Number of transactions 2,500,000
Issuing Statements 1,100,000 Number of statements 500,000
Collections 160,000 Number of transactions 100,000
Customer inquiries 660,000 Telephone minutes 600,000
The following are annual information on the four types of customers:
Personal Loans Cheque accounts Platinum accounts Savings accounts
Number of product 7,000 28,000 12,000 2,000
ATM transactions 0 160,000 18,000 20,000
Computer transactions 210,000 1,800,000 320,000 200,000
Number of statements 60,000 250,000 140,000 50,000
Number of transactions for collections 40,000 8,000 16,000 0
Telephone minutes 80,000 280,000 160,000 70,000
Annual operating profit contribution 500,000 2,000,000 600,000 320,000
Required:
Problem 1: Prepare Direct Customer Profitability Analysis for each of the four customers.