Randy, a student, has $340 to deposit in a new chequing account, but Randy knows he will not be able to maintain a minimum balance. He will not use an ATM card, but will write a large number of cheques. Randy is trying to choose between the unlimited check writing offered by South Trust and the low per-check fee offered by Sun Coast. How many checks would Randy have to write each month for the account at South Trust to be the better option?

Question

Daniella Vaughan

Business

25 July, 15:22

Randy, a student, has $340 to deposit in a new chequing account, but Randy knows he will not be able to maintain a minimum balance. He will not use an ATM card, but will write a large number of cheques. Randy is trying to choose between the unlimited check writing offered by South Trust and the low per-check fee offered by Sun Coast. How many checks would Randy have to write each month for the account at South Trust to be the better option?

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Answers (1)

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Pruitt · Answer 1

17 cheques per month

Explanation:

ATM services and charges are same in both banks

so, ATM charges is ignore

lets calculate the break even in cheque drawing between both banks

Total cost = Fixed cost + Variable cost

Fixed cost = monthly charges

Variable cost = cost per check

For south trust bank the monthly charges is $11

cost of writing single check is $0

therefore,

Total cost = Fixed cost + Variable cost

lets use X to represent number of order

= $11 + 0 * X

For sun coast bank the monthly charges is $2.5

and $0.5 per check

therefore,

Total cost = Fixed cost + Variable cost

lets use X to represent number of order

= $2.5 + $0.5 * X

Equate both the equation

$11 = $2.5 + $0.5 * X

$8.5 = $0.5 * X

X = 17

so, the number of cheques to be drawn of south trust bank is 17 per month