In light of the new cost information, Larry Roberts, the bank president, wanted to know whether a decision made two years ago to modify the bank's checking account product was sound. At that time, the service charge was eliminated on accounts with an average annual balance greater than $1,000. Based on increases in the total dollars in checking, Larry was pleased with the new product. The checking account product is described as follows: (1) Checking account balances greater than $500 earn interest of 2 percent per year, and (2) A service charge of $5 per month is charged for balances less than $1,000. The bank earns 4 percent on checking account deposits. Fifty percent of the accounts are less than $500 and have an average balance of $400 per account. Ten percent of the accounts are between $500 and $1,000 and average $750 per account. Twenty-five percent of the accounts are between $1,000 and $2,767; the average balance is $2,000. The remaining accounts carry a balance greater than $2,767. The average balance for these accounts is $5,000. Research indicates that the $2,000 category was by far the greatest contributor to the increase in dollar volume when the checking account product was modified two years ago.