Korea Auto Insurance Company Inc (Korea Auto Insurance), incurred by both direct and indirect costs. Direct costs incurred in the branches, they run sales and operations, while the indirect costs incurred in the headquarters, it maintains offices in the activities in the field of information technology, operational support, investment, marketing and general administrative commands . Indirect costs accounted for a significant portion (41 percent) of the total costs incurred. However, they can be directly or traced logically related to specific activities in sales. Korea Auto Insurance currently allocated indirect costs incurred by headquarters to branches based on sales revenue. Using the amount of sales revenue as a base for air distribution is not considered a reasonable method to branch manager Daejeon. Branch managers have complained that the current allocation base was not related to the actual level of benefits they received from headquarters. They argued that the allocation process distorted the performance of the industry, as reflected in the books. Branch Manager Taejon suggested that ABC (activity-based cost) method is used to solve the problems associated with the current process of allocating overhead costs. "Hide
Source: Richard Ivey School of Business Foundation 8 pages. Publication Date: October 22, 2009. Prod. #: 909B14-PDF-ENG
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