A) RSB&T's operating profits are 2,625,000.
B) The profit from Customer A = 42 and Customer B=42.
C) The profit from Customer A=77.7 and Customer B=-207.75(loss)
<h3>What does mean by profit?</h3>
- Profit is the term used to describe the financial gain experienced when the revenue from a commercial activity outweighs the costs, costs, and taxes incurred to maintain the activity in question.
- A business's financial gain when revenue exceeds costs and expenses is frequently referred to as profit. One cup of lemonade, for instance, costs a child at a lemonade stand one quarter. She then charges $2 for the beverage. She made $1.75 in profit on the cup of lemonade.
- All costs are first deducted from sales, and the result is then divided by sales. This creates the profit formula, which is expressed as a percentage. (Sales - Expenses) Sales = Profit is the formula.
Data on two representative customers follow.
[A] Compute RSB&T's operating profits.
Computation of Operating Profits:-
Revenue 19,500,000
Interest to Depositors (1,875,000)
Overheads (15,000,000)
Total operating Profit 2,625,000
[B] Costs are based only on Deposits
Particulars A B
Revenue 312 312
Interest Cost -30 -30
Operating Cost -240 -240
Profits 42 42
[C] As per Activity based costing
Particulars A B
Revenue 312 312
Interest Cost -30 -30
ATM Uses -75 -150
Branch Visit -30 -120
Processing Transaction -3.3 -123.75
Managing Function -96 -96
Profits/Loss 77.7 -207.75
Therefore,
A) RSB&T's operating profits are 2,625,000.
B) The profit from Customer A = 42 and Customer B=42.
C) The profit from Customer A=77.7 and Customer B=-207.75(loss)
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