Products with higher environmental and social costs may appear to be more profitable when these costs are allocated to products using traditional allocation methods.

Question

Quizplus · Accepted Answer

Traditional allocation methods do not take into account the environmental and social costs associated with a product, and only allocate direct and indirect costs. By not accounting for these costs, products with higher environmental and social costs may appear to have lower costs and higher profitability. However, this is not a true representation of the actual costs and impacts of the product.

Products with Higher Environmental and Social Costs May Appear to Be