The Bank Of Al Ain Case
The Bank of Al Ain has operated for many years under the assumption that profitability could be increased by increasing dollar volumes. Historically, BAA's efforts had been directed towards increasing total dollar sales and total dollars of account balances. In recent years, however, BAA's profits were eroding. Increased competition, particularly from Mortgage Lenders, Credit Unions and Building Societies, was the cause of the difficulties. Also BAA's managers had no idea what their products were costing. Upon reflection, they realised that they had often made decisions to offer a new product, which promised to increase dollar balances, without any consideration of the actual cost to provide the service. To clarify costs, the bank's managers calculated the cost of the products using a traditional costing approach.
Read the Case and the attached excel solution and answer the following question in a report format
1. Abstract
2. Body
a. Evaluate the cost and profitability of the cheque account product.
b. Summarizes the rates for each activity.
c. Compares the cost of each product..
d. Addresses the cost and profitability of the four categories of cheque account product. Are all categories profitable? Ranks products by profitability
e. Identifies the product(s) (or categories) that could be dropped/cancelled
f. Make a number of recommendations to increase the profitability of the cheque account product.
g. Recommendations follows logically from analysis
h. Discuss the advantages of adopting an Activity Based Costing system for the activities of the bank.
3. Conclusion
Concludes with overall recommendation (s) and summary.
Attachment:- Assignment Files.rar