Computing and Interpreting Activity Rates
(This exercise is a continuation of Exercise 7–7; it should be assigned only if Exercise 7–7 is also assigned.) The manager of the Avon branch of First Bank of Eagle has provided the following data concerning the transactions of the branch during the past year:
The lowest costs reported by other branches for these activities are displayed below:
1. Using the first-stage allocation from Exercise 7–7 and the above data, compute the activity rates for the activity-based costing system. (Use Exhibit 7–6 as a guide.) Round all computa- tions to the nearest whole cent.
2. What do these results suggest to you concerning operations at the Avon branch?
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