ethical issues with cost allocation 1

Read the following in Chapter 2 of the Fundamentals of Cost Accounting text:

  • Exercise 2-34, “Cost Allocation—Ethical Issues,” page 67.

After reading the exercise, respond to the following prompts:

  1. How would you recommend Star allocate the common costs between drinks and pastries?
  2. You are the assistant manager and have been working with Star on the allocation problem. What should you do?

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