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250 WORDS Do you think there could be ethical concerns as it relates to cost allocation...

250 WORDS

Do you think there could be ethical concerns as it relates to cost allocation in a manufacturing company with various departments? Discuss why costs might be purposely misclassified to a particular department and the results of such an error (for example, what effect would this have from year to year?)

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Yes there could be definitely the chances of arising ethical concerns of cost allocation in manufacturing company with various departments.This could be explained with the help of following example.For example x ltd has two departments namely A and B for which electricity bill is allocated on basis of light points.There are 10 light points in A whereas 15 in B. Along with these lights A also uses a machinery to perform it's functions which uses the electricity of 50 lights.Now it will lead to arise of ethical concern if X LTD. Does not take the machinery into the consideration and results in error as B has to pay more electricity charges for which A has used.

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