Full costing allocates nontraceable common costs to marketing entities and has three major weaknesses. What are they?
Full costing has three major weaknesses:
1. the relative profitability of different marketing entities can shift radically when we replace one arbitrary way to allocate nontraceable common costs by another
2. the arbitrariness demoralizes managers, who feel their performance is judged adversely
3. the inclusion of nontraceable common costs could weaken efforts at real cost control