Income Statement for Taejon Branch: Year Revenue Direct Costs Indirect Cost Total Cost Net Income

2007 23.6 12.6 8.5 21.1 2.5 2008 33.2 17.7 13.0 30.7 2.5

Computations of overhead absorption rate:

Team IT Team

Activity Branch PC maintenance Headquarters IT system support Branch IT System Support Employee Training Training of Sales People Operating performance evaluation and reporting Handling traffic accident cases Equity Investment Debt Investment Investment performance evaluation and reporting Advertisement New product/New channel development

OS Team

Investment Team

Marketing Team

GA Team

Payroll administration Performance evaluation Education and training Headquarters building maintainence Branch building maintainence

2007 IT Team OS Team Investment Team Marketing Team 1.428 1.691 1.368 1.000

2008 1.522 1.517 1.822 1.270

GA Team Total Cost Income statement Revenue Direct Cost Overhead Cost Total Cost Net Income

1.156 6.644

0.744 6.874

23.6 12.6 6.644 19.244 4.356 58%

33.2 17.7 6.874 24.574 8.626 29%

The cost drivers making the biggest differences in the net incomes of (1) and (3) are: The number of employees, number of accidents and revenues amount These two cost drivers were influenced by Kim in 2008 thus increasing the net income from 4.4 million dollars in 2007 to 7.9 m

2007 0.010 0.007 0.010 0.004 0.013 0.110 0.023 0.036 0.018 0.004 0.790 0.210

2008 0.008 0.013 0.013 0.003 0.014 0.070 0.031 0.033 0.018 0.003 0.890 0.380

0.001 0.002 0.004 0.230 0.004

0.001 0.002 0.004 0.250 0.004

m 4.4 million dollars in 2007 to 7.9 million dollars in 2008. Basically, Kim reduced the number of employees from 82 on 2007 to 45 in 2008

ees from 82 on 2007 to 45 in 2008, thus cutting down overhead costs. Additionally, due to Kims efforts to reduce the number of accidents

o reduce the number of accidents through public relations and campaigns throughout 2008, and de-marketing to lessen the number of hi

rketing to lessen the number of high-risk customers, accident costs reduced thus high revenues realized. Moreover, during Kims managem

Moreover, during Kims management in Taejon, insurance revenue increased contributing to increased total revenue.

total revenue.

Team IT Team

Activity Branch PC maintenance Headquarters IT system support Branch IT System Support Employee Training

OS Team

Training of Sales People Operating performance evaluation and reporting Handling traffic accident cases

Investment Team

Equity Investment Debt Investment Investment performance evaluation and reporting

Marketing Team

Advertisement New product/New channel development

GA Team

Payroll administration Performance evaluation Education and training Headquarters building maintainence Branch building maintainence

Team IT Team

Activity Branch PC maintenance Headquarters IT system support Branch IT System Support Employee Training Training of Sales People Operating performance evaluation and reporting Handling traffic accident cases Equity Investment Debt Investment Investment performance evaluation and reporting Advertisement New product/New channel development

OS Team

Investment Team

Marketing Team

GA Team

Payroll administration Performance evaluation Education and training Headquarters building maintainence Branch building maintainence

2007 IT Team OS Team Investment Team Marketing Team GA Team Total Cost $0.85 $2.99 $0.51 $0.21 $19.33 $23.89

2008 $1.18 $2.48 $0.71 $0.38 $11.52 $16.27

Income statement Revenue Direct Cost Overhead Cost Total Cost Net Income 23.6 12.6 6.644 19.244 4.356 33.2 17.7 6.874 24.574 8.626

Overhead Absorption Rate No. of PC Units No. of PC Units No. of PC Units No. of Employees

No. of sales persons No. of Branches No. of accidents

Amount of Investments Amount of Investments Amount of Investments

No. of Branches No. of Branches

No.of employees No.of employees No.of employees No.of branches No. of employees

2007 0.010 0.007 0.010 0.004 0.013 0.110 0.023 0.036 0.018 0.004 0.790 0.210

2008 0.008 0.013 0.013 0.003 0.014 0.070 0.031 0.033 0.018 0.003 0.890 0.380

0.001 0.002 0.004 0.230 0.004

0.001 0.002 0.004 0.250 0.004