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BAE

Prepare a Comparative Income Statement of the Taejon branch as of 2007 and 2008

1. 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.


2. Using your cost drivers (from # 3 above), prepare a Comparative Income Statement of the Taejon branch as of 2007 and 2008. Compare your answer to the result from # 1 above). Which method provides the best advantage to evaluate Kim’s performance? Why?

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