A6221, Managerial Accounting for MBAs, Dr. Alireza Daneshfar, University of New Haven
Case: Shun Electronics Company
CASE OBJECTIVES: This is an introductory-level case on overhead cost allocations and cost
systems design. This case helps you understand the design of cost systems, in general, and the
creation of cost allocation overhead rates, in particular. Objectives are:
1. To provide a basis for the articulation and specification of an overhead cost system‘s design.
In this regard, overhead cost systems rest on two design choices—(a) the designation of cost
pools for aggregating overhead costs and (b) the choice of an allocation base for transporting the
overhead costs out of each pool to the end product.
2. To provide opportunities for students to implement a cost system‘s design.
3. To highlight the fact that the product costs changed without any change in operations or
supplier costs. Thus, the product costs changed solely due to the changes in the choice of
overhead cost pools allocation base.
Requirements:
Here are two requirements to start with. However, the case discussion can go beyond these two
equirements and you should be prepared for:
1. Where did the figures in case Exhibits 1, 2, and 3 come from and how were they computed?
2. To date, the shelf shower radio was thought to cost M$61.00. Manjit Singh says it‘s more
accurately determined cost is M$67.61. Why the difference?
Intoroduction to Case Shun Electronics Company
Case - Shun Electronics Company
Case - Shun Electronics Company
Radio Manufacturing case_Page_1
Radio Manufacturing case_Page_2
Radio Manufacturing case_Page_3
Radio Manufacturing case_Page_4
Radio Manufacturing case_Page_5
Radio Manufacturing case_Page_6
Radio Manufacturing case_Page_7
A621, Managerial Accounting
Questions for the chase: Shun Electronics Company
1. How is the total direct factory cost of product PS in exhibit 1 is calculated? Show your calculations.
2. How is the overhead rate in Fa
ication department (200%) is calculated? (Use Exhibit 2 data).
3. What is the costing system ion exhibit 1 for overhead allocation? How is it different from the costing system used in exhibit 3?
4. How are the overhead rates for Assembly department in exhibit 3 calculated? Show your calculations.
5. How are the overhead rates for fa
ication department and Finished goods department in exhibit 3 calculated? Show your calculations.
6. How is the total direct factory cost of product PS in exhibit 3 is calculated? Show your calculations.