How do companies allocate costs? While the allocation may not affect their profit as a whole, if it is not done correctly, it can skew the data on the profitability (i.e., which department is actually making profits?)

Instructions

In your initial post,with prompts:

A critic says cost allocations are arbitrary and potentially misleading. Why do you think companies, including successful ones, continue to allocate costs? The same critic also noted, "It's easy to avoid the problem of arbitrary cost allocations. Just don't allocate any common costs to other cost objects." Share your thoughts on his comment.

In your reply post,with prompts:

Reply to a classmate's post that shares an example and add your thoughts from your personal experience or an academic source supporting your point of view.