Rock Solid Bank and Trust (RSB&T) offers only checkingaccounts. Customers can write checks and use a network of automatedteller machines. RSB&T earns revenue by investing the moneydeposited; currently, it averages 6.90 percent annually on itsinvestments of those deposits. To compete with larger banks,RSB&T pays depositors 0.50 percent on all deposits. A recentstudy classified the bank’s annual operating costs into fouractivities.

Activity	Cost Driver		Cost	Driver Volume
Using ATM	Number of uses	$	4,050,000		5,400,000	uses
Visiting branch	Number of visits		2,430,000		405,000	visits
Processing transaction	Number of transactions		17,820,000		216,000,000	transactions
Managing functions	Total deposits		16,200,000	$	1,012,500,000	in deposits
Total overhead		$	40,500,000

Data on two representative customers follow.

	Customer A		Customer B
ATM uses		100		200
Branch visits		5		20
Number of transactions		40		1,500
Average deposit	$	6,000	$	6,000

Required:

a. Compute RSB&T's operating profits.

b. Compute the profit from Customer A and Customer B, assumingthat customer costs are based only on deposits. Interest costs =0.50 percent of deposits; operating costs are 4 percent (=$40,500,000/$1,012,500,000) of deposits.

c. Compute the profit from Customer A and Customer B, assumingthat customer costs are computed using the information in theactivity-based costing analysis.