Arizona Western CollegeBA 6131MBA 6131 Case Analysis Questions Case 1 Korea Auto Insurance Read

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MBA 6131 Case Analysis Questions Case 1: Korea Auto Insurance Read the case and consider the following issues: 1. What is the rational for allocating central overhead to the business units? 2. What... would be the net income of the Taejon branch as of 2007 and 2008 if the headquarters' overhead costs were allocated by the current method? Calculate the amounts of revenue, and direct and indirect costs of the Taejon branch for these two years. 3. The current overhead cost driver, branch revenue, is criticized because it lacks any logical relationship to the overhead costs allocated by headquarters. Choose more appropriate cost drivers for the 17 overhead costs listed in case Exhibit 3. You may refer to descriptions of the 17 overhead costs incurred by the five teams at the headquarters. 4. Using your cost drivers from (2) above, compute the net income of the Taejon branch as of 2007 and 2008. Compare your answer to the amount from (1). Do you agree that Kim's performance in 2008 would now be evaluated more properly? Why or why not? 5. Which cost drivers make the biggest differences between the net incomes of (1) and (3)? Do these cost drivers have anything to do with Kim's effort in 2008? 6. The ABC method matches specific reasonable cost drivers with corresponding overhead costs. Discuss why the ABC method would reward a manager with higher motivation in a competitive market. Also, discuss the shortcomings of the ABC method at the level of the entire organization. OPPO F11 [Show More]

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