Costing Characters And Characteristics Of A Bank Costs

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Register to read the introduction… Variable Transaction Volume. A large portion of bank expenses are for personnel and equipment directly or indirectly involved in processing checks and other documents. However, the daily volume of checks handled fluctuates widely from one day of the week to the next, from month to month, and from one season to another.
2. Predictability. The predictability of check volume and how it fluctuates, has enabled many banks to schedule portions of their payroll costs to coincide with the anticipated volume of activity by using part-time clerks in the operations affected by the check activity.
3. Traceable Costs. Most bank costs are associated directly to either a fund-providing activity, a fund-using activity, or a nonfund activity. As a result, a bank usually has a reasonable basis for allocating its costs. For example, tellers, proof and transit clerks, and bookkeepers usually can be associated directly with the deposit function. The data center can be associated with specific activities on the basis of tasks it performs for those
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In the banking industry, expenses are incurred in order to produce something of value. Each time we spend money we expect some value in return, whether in goods or in services.,Cost analysts look upon expenses as short-term expenditures. In banking, some expenses by themselves do not reflect a value for delivery to a customer, becoming an element of value only when a product is identified or delivered. Therefore, cost is counted as an element of the value of the product. We see expenses building into costs at the point where value or worth becomes definable. Graphically this concept appears as …show more content…
Therefore, the budgetary line-item costs must be traced to activities before the profitability analysis can be performed. In the case of loan review personnel, these activities might include interviewing the applicant, obtaining additional credit information, and evaluating the loan. Each of these activities requires time from the loan review officer, which is costly. Given the identification of activities and the determination of activity costs, the portion of loan costs due to personnel expenses can be

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