This is a Darden case study. The Shun Electronics' KL Radio unit seeks to develop the three of its departmental cost divisions to eight, with each having individual overhead cost allocation rates. Consequently, it seemsthat the final costs for four of the six radios will surge, whereas two will diminish. The case allows students to make decisions pertaining to (a) comprehend the reason for the consequences; (b) detail the significantalterationsincorporated in the cost distribution system; and (c) assessif the alterations are for the better.
1. Where did the figures in exhibit 1, 2, and 3 come from, and how were they computed?
2. To date, the shelf-showers radios were thought to cost M$61.00. Manjit Singh says that M$67.56 is the accurate cost. Why the difference in the cost numbers?