The Shun Electronics KL Radio division wants to expand its three departmental cost centers to eight, each with its own overhead cost allocation rate. As a result, it appears that the total costs for four of its six radios will increase, while two will decrease. The case puts students in the role of having to (a) understand why such a result would occur; (b) explain the specific changes made in the cost allocation system; and (c) evaluate whether the changes are an improvement.
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