Accounting cost estimation | Accounting homework help

Cost management is particularly important in the banking industry where pricing is competitive and interest rates are set by a combination of market forces and regulatory policies. Fictitious Bank Corp, is a midsized privately owned bank operating in multiple states. The company offers a range of traditional banking services including checking and savings accounts, IRAs, home and personal loans, and small business loans. In an effort to stay competitive in the marketplace, Fictitious’ top management has hired your team to perform an industry benchmark analysis of their different expense categories to assess their competitiveness in the market. 

Save Time On Research and Writing
Hire a Pro to Write You a 100% Plagiarism-Free Paper.
Get My Paper

As an industry expert in banking, you have access to data on Fictitious’ competitors. You have compiled data on the non-interest expenses of 66 competitors with total assets between 300 and 700 million dollars. This data is provided the bankdata.xlsx file. The first tab titled “NonInterest Exp” includes non-interest cost and loan data, in thousands of dollars, for the 66 competitors. Additionally, you have gathered ATM expense data for 40 competitors provided in the second table titled (ATM Exp). Since Fictitious is looking to cut labor costs, they want to get a better idea of what competitors are paying for ATM expenses.

Selected Data Definitions 

Total Non-Interest expense: all expenses incurred in the operation of the bank, which are not related to the interest paid on deposits and other liabilities.

Wage and Salary expense: total wages and salaries of bank employees excluding top executives. This expense includes insurance and other benefits.

Save Time On Research and Writing
Hire a Pro to Write You a 100% Plagiarism-Free Paper.
Get My Paper

Fixed Asset expense: expenses related to servicing physical assets such as rent, maintenance, and janitorial services. This number also includes depreciation on building and equipment owned.

ATM expense: expense related to ATMs including depreciation, maintenance, and service.

Demand deposits: total dollar value of time demand deposit accounts, which are funds available for immediate withdraw (i.e. upon demand).

Time deposits: total dollar value of time account deposits. Time accounts are funds that can only be withdrawn, without penalty, when the account matures, such as a certificate of deposit. 

Savings deposits: total dollar value of savings account deposits.

*all data a presented in thousands of dollars

Assignment

1.   Using the data provided in the “NonInterest Exp” tab, estimate the following OLS regression models for each of the three different types of expenses: wage expense, fixed asset expenses, and total non-interest expenses (i.e. run three different regressions).

Expense = α + β1*R.E. Loans + β2*Pers. Loans + β3*Small Bus. Loans + ε   

2.   Interpret the coefficients and explanatory power of the models in part1. Which costs are fixed and variable? Does the size and statistical significance of these coefficients seem to match what you would think about the three different types of costs? 

Calculate your order
Pages (275 words)
Standard price: $0.00
Client Reviews
4.9
Sitejabber
4.6
Trustpilot
4.8
Our Guarantees
100% Confidentiality
Information about customers is confidential and never disclosed to third parties.
Original Writing
We complete all papers from scratch. You can get a plagiarism report.
Timely Delivery
No missed deadlines – 97% of assignments are completed in time.
Money Back
If you're confident that a writer didn't follow your order details, ask for a refund.

Calculate the price of your order

You will get a personal manager and a discount.
We'll send you the first draft for approval by at
Total price:
$0.00
Power up Your Academic Success with the
Team of Professionals. We’ve Got Your Back.
Power up Your Study Success with Experts We’ve Got Your Back.
Open chat
1
Order through WhatsApp!
nursingesssayswritings.com
Hello!
You Can Now Place your Order through WhatsApp

Order your essay today and save 30% with the discount code ESSAYHELP2