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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Olajidey Olajidey · Answer 1 · 2020-02-17T15:23:22+01:00

Answer:

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