costacctg13_sm_ch05

Suppose wigan is bidding against another firm fo r a

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Unformatted text preview: 0.00 240.00 750.00 1,047.00 100 8 0 72 48 15 243 $(210) 125 16 6 24 12 27 210 $ 54 12.50 12.80 30.00 16.00 72.00 237.50 36.80 36.00 112.00 132.00 13.50 55.50 156.80 609.80 $593.20 $ 437.20 The assumpt ion that the Robinson and Farrel accounts exceed $1,000 every month and the Skerrett account is less than $1,000 each mo nth means the mo nthly charges apply o nly to Skerrett. One student with a banking background noted that in this so lut ion 100% of the spread is attributed to the “depositor side o f the bank.” He noted that often the spread is divided between the “depositor side” and the “lending side” of the bank. 2. Cross­subsidization across individual Premier Accounts occurs when profits made on some accounts are offset by lo sses on other accounts. The aggregate profitabilit y on the three customers is $437.20. The Farrel account is highly pro fitable ($593.20), while the Robinson account is sizably unprofitable. The Skerrett account shows a small pro fit but only because o f the $240 monthly fees. It is unlikely that Skerrett wil...
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