Co-op Bank Essay

2229 Words May 2nd, 2015 9 Pages
Case Analysis Report
The Co-operative Bank

Submitted to
Wila-sini Wongkaew, PhD

Prepared by
Pitchapa Nuancharoen 578 20011 26
Pitchaya Wijitthanakul 578 20034 26
Pimpika Hitakomate 578 20108 26
Pattarin Ha-upala 578 20200 26
Salila Junsuriyapong 578 21144 26
Supattana Srisalaui 578 21282 26

2601633 Advanced Managerial Accounting and Cost Management
Semester 2 Academic Year 2014

Executive Summary
This report provides an analysis and evaluation of the cost system of The Co-operative Bank. Method of analysis is Internal Environment analysis.
As the regulation had been more relaxed in the bank industry, cost accounting became more important due to
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5. Calculate activity cost driver rate.
6. Trace activity cost to each product with 15% remaining to the sustaining cost.
7. Calculate product profitability. (See the profitable/unprofitable products list in Exhibit 3)
After they implemented ABC, they use the result for decision making in many way.
I. Product decision
The bank used ABC allocating sustaining cost to analyze whether its product were profitable. Its targeted product were financial advice and new investment products which grew in deregulated area. Unfortunately they were not successful as they hoped. However; there were high profitable products: Visa credit cards.
II. Customer profitability
With limited customers’ data, the ABC team extend the study to the customer-specific expenses based on sample of current accounts. They found that 55% of expense were related to processing transactions and the rest were maintaining costs. Revenue measurement was classified by each product for each customer. The analysis showed that current accounts were unprofitable because of low balance so the managers started to find the way to attract this product from customers. For Visa credit card, the team divided into two groups: profitable and unprofitable customers. The bank earned interest income from customers who had large unpaid balances and processing fee from customers who transacted frequently.
III. Overhead reduction and business process reengineering
From SABRE project, the Co-op Bank moved their

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