EXERCISE 6-1. Explain how the allocation process can make a fixed cost appear variable, leading to a poor decision.

EXERCISE 6-4. Reasons for Allocating Indirect Costs. Warner Development Company has a security department that provides security services to other departments within the company. Department managers are responsible for working with the head of security to ensure that their departments are protected.

Required

Explain why Warner might want to allocate security department costs to other departments.