Fifth Third Bank Is a Banking Services Company That Offers

Multiple Choice

Fifth Third Bank is a banking services company that offers several different types of checking accounts.The bank has recently adopted an activity-based costing system to assign costs to its checking accounts.The following data relate to the Mind Your Money checking accounts and the ABC cost pools:
Annual number of accounts = 60,000 accounts $\begin{array}{lrl}\text { Cost Pool }&\text { Cost }&\text { Cost Drivers }\\\hline \text { Returned check costs } & \$ 3,000,000 & \text { Number of returned checks } \\\text { Account reconciliation costs } & 60,000 & \text { Number of account reconciliation requests } \\\text { New account setup } & 650,000 & \text { Number of new accounts } \\\text { Archive requests } & 400,000 & \text { Number of archive requests } \\\text { Web site costs } & 195,000 & \text { Per account type } \\\text { Total checking account costs } & \$ 4,305,000 &\end{array}$

$\text { Annual activity information related to cost drivers: }$

$\begin{array}{llr}\text { Cost Pool }&\text { All Products }&\text { Mind Your Monev Checking }\\\hline \text { Returned checks } & 200,000 \text { returned checks } & 18,000 \\\text { Account reconciliation costs } & 3,000 \text { reconciliation requests } & 420 \\\text { New account setups } & 60,000 \text { new accounts } & 15,000 \\\text { Archive requests } & 100,000 \text { archive requests } & 60,000 \\\text { Web site costs } & 10 \text { types of accounts } & 1\end{array}$
How much is the rate to be used to allocate account reconciliation cost to each Mind Your Money checking account?

A) $20.00
B) $1.00
C) $0.14
D) $142.85