Accounting cost estimation

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.

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.

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 Time accounts are funds that can only be withdrawn, without penalty, when the account matures, such as a certificate of deposit.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 paper price
Pages (550 words)
Approximate price: -

Why Work with Us

Top Quality and Well-Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

Professional and Experienced Academic Writers

We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

24/7 Customer Support

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.

Essays

Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.

Admissions

Admission Essays & Business Writing Help

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.

Reviews

Editing Support

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.

Reviews

Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.