Maggie Chen, the owner of the Yin Yang Yogurt Shop, is very pleased with how her business has grown over the past two years. She now has five branches in various suburbs in addition to her flagship store. Maggie has asked for your suggestions regarding the wisdom of allocating the following central office costs to the branches. Each branch has its own store manager and staff.
Payroll Processing. The firm administers payroll from its main office. However, each branch manager handles the hiring and firing of employees (mostly hourly workers). The number of people on the payroll drives the expense for payroll processing and, of course, the payroll itself. In addition, there is one-time paperwork every time a new employee is hired or an existing employee is let go.
Advertising. The firm runs ads in the local newspaper, as well as radio spots on the morning talk shows. Maggie believes that sales would drop 15%, across the board, if she were to discontinue the advertising.
Purchasing and Inventory Handling. All purchasing is done centrally. The firm replenishes branch inventory from a central warehouse each morning. The amount delivered depends on the branch manager’s estimate of demand. Branch managers differ in their ability to forecast demand. Some branches have a greater tendency to run out of a flavor and ask for an additional delivery in the afternoon.

Required:
Help Maggie decide if she should allocate any of the listed cost items to branches. Distinguish between using the allocation for the purpose of managerial performance evaluation and using the allocation for the purpose of evaluating branch profitability.