Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello

Exercise 17

Janice Black, manager of the Produce Department at Spanky's Grocery, has a monthly responsibility margin of $4,000. The store manager has decided to allocate storewide common costs to each department. After the allocation Ms. Black's responsibility margin is -$ 1,200 per month: Identify the disadvantages of allocating common costs to responsibility centers.