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Loanguard LLC is an outstanding micro lending and mortgage firm that will be attending to the enormous needs of small businesses, real estate professionals, builders, and individual home buyers. They have access to a full range of microfinance and they offer the right loanwith the best rates, terms and coststo meet the prospective customers broad needs.

The industry may also venture into a declining stage of its economic life cycle because of the competition they face from commercial banks which is becoming imminent. Therefore, Sara Lu, the financial supervisor of Loanguard LLC, chose to implement time-driven ABC as part of a process of better understanding the cost structure of the firm and becoming more cost-effective. To start, she looked more into the cost of taking a customers loan application.

Sara knows already that different types of loans would have varying length of time taken when it comes to collecting applicant information. For example, the timing of the collection of applicant information for some types of loans like auto loans or unsecured loans would be shorter than a mortgage. Sara needed to investigate further and obtain some understanding over cost differences, so she gathered the information below from the head office:

-There are two loan application officers, each earning $129,600 per year.

-Sara determined that fringe benefits average 20% of salary and that the office support costs for an employee (office space, laptop, supplies etc.) in that head office averaged $6,480 per employee.

-Each loan application officer had 2,000 hours available to collect applicant information with accounting for time off, training, and other tasks.

Required: (please show/label your calculations i.e., show your work, not just your final answers)

1. How much is the cost per minute available to collect loan applicant information?

2. For each of the three types of loans indicated, calculate the average TDABC cost of collecting applicant information.

Type of loan	Average time to collect applicants information
Mortgage	70	minutes
Auto	40	minutes
Unsecured	30	minutes

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