[bartonrc]

If non-traceable costs are not allocated to the various operating units within an organization, who ends up paying these costs?

[nil1410]

If non-traceable costs are not allocated to the various departments within an organization, the organization as a whole will have to use part of its revenue to pay for those costs. They will become part of the fixed costs that the company will have to factor into its budget. The problem I see with non-traceable costs is that proper pricing of goods and services might be difficult or not very accurate. If these costs are allocated equally across all departments, then some departments might be unprofitable even though they might be considered profitable if those non-traceable costs were not added. This could possible impact their department's managers and employees in a negative manner during a performance review. These non-traceable costs are in fact costs that the individual departments have no control over. The second issue I see is that if an organization does not include the non-traceable costs into their pricing plan, they might in fact be lossing money overall even though some of their products might in fact be making a profit.

[morgaine300]

I don't think OP is around - the thread's a year old.