1. Describe the competitive environment in which MDD operates and its strategy for success. What factors are important for its value to its parent company?
2. Identify the four "causes" of MDD's "excess" capacity. Describe each briefly (2-3 sentences each, at most). Note that the "causes" are not the same things as potential choices for the calculation of the predetermined overhead rate (PDOR).
3. What operating decision are the MDD managers deliberating (hint: it's not about cost allocation)?
4. What are the 3-5 most important factors MDD managers should consider when making this decision? You might want to consider your response to the last part of Question 1 when you answer the second part of this question.
5. Confirm the full-absorption reported unit cost of $3.13 per die for Product UWO-1. Do not forget to use the corrected Exhibit 7 data in the Micro Devices Additional Information document.