The danger in allocating common fixed costs among product lines or other segments is that it might show a product line or segment as profitable, but in reality, it's not.
It can also show a segment as non-profitable while in reality, it is a successful one.
In a business, common fixed costs cannot be allocated in a product line because it's the common fixed cost for two or more segments.
Allocating it in a product line can be a matter of concern because it affects the overall profit of an organization.
Thus, the management must take rational decisions to avoid such losses.
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