company major businesses operates. One business manufactures sells unicycles commercial circuses (total sales $150M), sells bicycles public (total sales $20M). The unicycle business occupies 75,000 square feet manufacturing warehouse, bicycle business occupies remaining 25,000 square feet.

Business scenario

Unicycle and bicycle manufacturing

Advertising and warehousing costs

The totality of the advertising and warehousing costs -- M -- were divided equally between the two businesses. Specifically, this means that advertising costs were of 0.5 M. For the unicycle business and 0.5 M. For the bicycle business. Similarly, in a context in which the total warehouse costs were of M, and they were equally divided between the two businesses, it is stated that 0.5 M. were the warehousing costs for the unicycle business and 0.5 M. were the warehousing costs for the bicycle business.

Recommendations for cost allocation

Aside from the traditional manner of dividing the total costs equally and allocating them...
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