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EXERCISE 6-1. Explain how the allocation process can make a fixed cost appear variable, leading...

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Accounting

EXERCISE 6-1. Explain how the allocation process can make a fixed cost appear variable, leading to a poor decision.

EXERCISE 6-4. Reasons for Allocating Indirect Costs. Warner Development Company has a security department that provides security services to other departments within the company. Department managers are responsible for working with the head of security to ensure that their departments are protected.

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Explain why Warner might want to allocate security department costs to other departments.

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