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# Costs and Revenues

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Home Town Bank has two types of individual customers who make demand deposits: college students and regular customers. The bank charges college students\$.10 per check but regular customers get free checking service. The bank earns 10% on the customer deposits by lending money to other clients and pays the customers 5% on deposits.

Each type of customer costs the bank \$20 in terms of accounting and mailing. The average college student deposit in Home Town Bank is \$300 regular customers have average deposits of \$1,000 college students write an average of 100 checks per year

Which customer is more profitable for the bank?

#### Solution Summary

Solution describes which customer is more profitable for the bank.

\$2.19

## Time Warp, New Year's Day (2016)

Can you help me with the following assignment?

It's New Year's Day, 2016. You just had a great New Year's Eve celebration; you finished analyzing the performance of Tablet Development and are ready to charge ahead into the future. As you turn on the TV and try to open your eyes, you notice something strange (again). The TV commentator is saying something about New Year's Day, 2012. You have a sinking feeling, and sure enough, it's back to 1/1/2012. You realize that you are in Time Warp 2.

This time you decide to do your decision making differently. You are going to use a technique that you became familiar with last year, CVP analysis. And you are going to decide all of your decisions at once. No feeling your way through it this time. You are going to make all of your decisions now, for the next four years and just cruise through it this time.

You analyze the results of your first set of decisions that you made in Time Warp 1, from 2012 to 2015. You have the data, you kept it all. But now you are going to use CVP analysis to help you determine your new strategy. And you have a tool to use, the CVP Calculator.

You analyze the results using CVP and develop your complete four year strategy. You decide to make notes about your analysis and your reasoning process; just in case you have to do this again (You are praying that you can finally move ahead this time when you get to 2016.)

2015: 12/15 hired. 12/30 turned in first report to Sally a few days early. 12/31 - celebrated

Time Warp 1 begins: 1/1/2016 WARPS INTO 1/1/2012
You freak out, and then realize you have to make decisions for 2012 - 2015, which you do.
12/31/2015 - you have gone through all four years, and you write your report to summarize how you did. You are hoping that you will wake up tomorrow and it will be 2016.

Time Warp 2 begins: 1/1/2016 WARPS INTO 1/1/2012 (Again)
Now its 1/1/2012: you decide to use CVP analysis and develop a four year plan for your strategy. You analyze the results of your first decisions in Time Warp 1 and make notes. You use the CVP Calculator to help you develop your strategy and you make more notes explaining your logic and your analysis. Then you take a short breather before you start in again tomorrow.

See *ATTACHED* files for complete details!

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