Lee

Case Solution for Headquarters’ Overhead Cost Allocation at Korea Auto Insurance Co. Inc.
Complete Case details are given below :
Case Name :      Headquarters’ Overhead Cost Allocation at Korea Auto Insurance Co. Inc.
Authors :           Sangil Kim, Ho-Young Lee, Won-Wook Choi
Source :             Ivey Publishing
Case ID :            909B14
Discipline :        Accounting
Case Length :    08 pages
Solution Sample availability : YES
Plagiarism : NO (100% Original work)
Description for case is given below :
Korea Auto Insurance Co. Inc. (Korea Auto Insurance) incurred both direct and indirect costs. Direct costs were incurred at branches as they performed sales and operating activities, while indirect costs were incurred at headquarters as it supported branches through the activities of the information technology, operating support, investment, marketing and general administrative teams. Indirect costs accounted for a significant part (41 per cent) of the total costs incurred. However, they could be neither directly traceable nor logically related to specific sales activities. Korea Auto Insurance currently allocated indirect costs incurred by headquarters to branches based on sales revenue. Using the amount of sales revenue as an allocation base for overhead was not regarded as a reasonable method by the Taejon City branch manager. Branch managers had complained that the current allocation base was not related to the level of actual benefits they received from the headquarters. They argued that the allocation process distorted the operating performances of branches as reflected in the books. The manager of the Taejon branch suggested that the ABC (activity-based cost) method be applied to solve the problems related to the current overhead allocation process.
 
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Case Solution for Selecting a Pharmaceutical Company from Northeast Asia for Investment
Complete Case details are given below :
Case Name :      Selecting a Pharmaceutical Company from Northeast Asia for Investment
Authors :           Ho-Young Lee, James Russell Shaw Jr, Kyung Cho Moon
Source :             Ivey Publishing
Case ID :            W12196
Discipline :        Accounting
Case Length :    08 pages
Solution Sample availability : YES
Plagiarism : NO (100% Original work)
Description for case is given below :
Joe Clift, a co-founder and managing partner of private equity firm Blacksmith Partners LLC in New York, managed his company’s emerging market funds for several industries. He planned to add one company from Northeast Asia to generate growth in his pharmaceutical industry portfolio, and had focused on three outstanding pharmaceutical companies: Takeda Pharmaceutical Company Ltd. from Japan, Dong-A Pharmaceutical Company Ltd. from Korea, and Sinovac Biotech Company Ltd. from China. All three companies had shown strong growth in their respective markets over the years. Japan, the number-one pharmaceutical drug consumer in Asia, was also the second-largest individual market in the world, behind the United States. Japan generated sales of $60 billion, which constituted approximately 11 per cent of the global market in 2006. Korea maintained a competitive domestic market share supported by an excellent national health insurance system and high research power. Korea was the fourteenth-largest drug consumer in the global market as of 2008. China, being one of the fastest-growing pharmaceutical markets, was the second-largest pharmaceutical drug consumer in Asia. With an ever-growing population of senior citizens in Northeast Asia, the managing partner predicted strong potential growth in drugs for chronic diseases in these emerging markets. Which company should Clift choose among these three companies, and why?
 
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