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Assessment item 1—assignment
Due date: Within 14 days from 2/4/2007 ASSESSMENT

Length:

Objectives
This assessment item relates to the course learning outcomes 2, 3& 4 as stated in Part A of the Course Profile.
Details – Assignment
Questions in this assignment have been adapted from Hansen, DR & Mowen, MM 2006, Cost Management - accounting & control, 5th edn, Thomson South-Western, Mason, OH.
In this assignment there are two questions. The first relates to the Cuddly Koala Bank and the second to Capricornia Inc.
Question 1
Cuddly Koala Bank
There are two parts to this question.
Part A
Cuddly Koala Bank is in the process of implementing an activity based costing system. A copy of an interview with the manager of Cuddly Koala’s Bank credit card department follows:
1. How many employees are in your department?
Response: There are eight employees, including me.
2. What do they do (please describe)?
Response: There are four major activities: supervising employees, processing credit transactions, issuing customer statements, and answering customer questions.
3. Do customers outside your department use any equipment?
Response: Yes. Automatic bank tellers service customers who require cash advances.

4. What resources are used by each activity (equipment, materials, energy)?
Response: We each have our own computer, printer and desk, paper and other supplies are needed to operate the printer. Of course, we each have a telephone as well.
5. What are the outputs of each activity?
Response: Well, for supervising, I manage employees’ needs and try to ensure that they carry out their activities efficiently. Processing transactions produces a posting for each transaction in our computer system and serves as a source for preparing the monthly statements. The number of monthly customer statements has to be the product for the issuing activity, and I suppose that the number of customers served is the outcome for the answering activity. And I guess that the number of cash advances would measure the product of the automatic teller activity, although the teller really generates more transactions for other products such as cheque and savings accounts. So, perhaps the number of teller transactions is the real output.
6. Who or what uses the activity output?
Response: We have three products: classic, gold and platinum credit cards. Transactions are processed for theses three types of cards, and statements are sent to clients holding these cards. Similarly, answers to questions are all directed to clients who hold these cards. As far as supervising, I spend time ensuring the proper coordination and execution of all activities except for the automatic teller. I really have no role in managing that particularly activity.
7. How much time do workers spend on each activity? By equipment?
I just completed a work survey and have the percentage of time calculated for each worker. All seven clerks work on each of the three departmental activities. About 40 percent of their time is spent processing transactions, with the rest of their time split evenly between issuing statements and answering questions. Phone time for all seven workers is used only for answering clients' questions. Computer time is 70 percent transaction processing, 20 percent statement preparation, and 10 percent question answering. Furthermore, my own time and that of my computer and telephone are 100 perc