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Chemical Bank 1960 cost allocation case
Transcript of Chemical Bank 1960 cost allocation case
a) should operate within their budgets
b) should grow in deposits and loans
c) should earn satisfactory profit
Budget calculated every November
Problems: produce an useful earnings statement for branches and management Case Overview: Chemical Bank Case Overview
Recommendations Table of Content Partial Organization Chart Current condition (1960) overview In 1960 one of the largest banks in the U.S.
Metropolitan area of New York
Branches operated as independent banks
Performance measures through reports Two main point:
earning statement Budget Earning Statement Installment Loans
Interest on excess (or borrowed) funds
Rent and occupancy cost
Banking Division headquarters and general administration
Check Clearance department
Credit investigation department
Term loan department
Other indirect expenses
Deposits and loans
transfer pricing base of the possible barrier functional cost center change in structure measurement Conclusion Performance Measurement
Recommendation Line structure changing
operation division directly under banking division
Balance Score Card
implementation of BSC in Chemical bank helped to simplify and better organize the bank