Definition of functional cost analysis

annual survey by the Federal Reserve Board of the costs of banking services, and open to banking institutions on a voluntary basis. The functional cost analysis, comparing various asset, income, and cost ratios, is the only widely available measurement of the cost of providing banking products, such as deposits, withdrawals, and transit items. Functional costing measures the cost of providing each item, and can be readily compared to prior years. Although useful, functional cost analysis has a number of flaws. The number of participants is generally small and costs are based on ledger balances, which ignore balance sheet entries such as cash items (checks) in the process of collection. As of 1999 the functional cost analysis includes assets and liabilities of state, federal and local governments in the United States.