To: KAI Board of Directors
From: Jin Kim, Taejon Branch Manager
Date: 16 October 2009
Subject: Cost Allocation for KAI
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Dear Board of Directors,
Thank you for sparing your precious time reading this internal memorandum. After a detailed
investigation on the internal financial statements for the preparation of the operations report, I
would like to propose that the Senior Management should perhaps consider altering the cost
allocation system, which might not properly reflect the performance of each branch. For
instance, there was a decrease in net income of Taejon Branch last year, generally because of
the increased overhead cost allocated from the headquarters. It would be my great honor if
