Best cost allocation method Essay

SQ3R Survey Question Read Recite ReviewSQ3R impart help you build a framework to understand your meter reading concession and it helps us to extract useful information from the text.The reading text is intimately the unfair headquarters overhead make up allocation regularity of Korea amends company. There are concerns towards the system by a manager. And that lead to invalidate on net income of counterbalancees. Jin Kim is trying to develop more efficient systems.The reading text is just about the headquarters terms allocation method of Korea amends Co. Inc. Jin Kim, manager of the company, accused that the costing systems is inefficient as it leads to change magnitude in incremental cost inappropriately and discourages employees to reach the common goal of maximise profit. It is claimed that the heavy regulations towards the insurance industry by government, put pressure on many financial companies.As a result, many of them tended to adopt to the lowest degree contro versial cost allocation policy without considering managerial problems in detail. Jim Kim enforced several policies to generate higher return and less cost, yet thither is still room for development of a better system.1. What is the headquarters cost allocation method?2. What are the concerns of the branch manager?3. Why is the transfigure of cost systems necessary?4. How should the cost systems be adjusted?5. Any difficulties encountered when implementing spick-and-span system? 6. Who is/are the stakeholder(s)?7. What criterion does the current system use to deal overhead costs to branches? Why? 8. How does this effect branches?1-Exhibit 1 illustrates the cost structure of Korea Auto Insurance Co. Inc. Direct costs accounted for about 60 per cent of total costs while indirect costs accounted for about 40 per cent of total costs. Direct costs consisted of both in operation(p) costs (48 per cent) and admin.. 2-Kim, however, realized that expansion of the branch might penalize hi m and branch employees by not only incurring direct costs at the branch level but also by the branch beingness allocated a large amount of the headquarters overhead costs, resulting in tear down net income. 3-Paragraph of IT team, Operating supporting team and so on.The reading text is about the headquarters cost allocation method of Korea insurance Co. Inc. Jin Kim, manager of the company, accused that the costing systems is unfair as it leads to decrease in incremental income and thus discourages employees to reach the common goal of maximising profit. It is claimed that the heavy regulations and over-protection towards the insurance industry by government, put pressure on many financial companies.As a result, many of them tended to adopt least controversial cost allocation policy without considering managerial problems in detail. Jim Kim believed that there should be improvement for the costing system.