Cost Allocation at McDonald’s

• Values:
  • Direct Costs: $140,000,000
  • Indirect Costs: $60,000,000
  • Allocation Bases: Number of Orders, Sales Revenue

• Requirements:
  1. Allocate indirect costs using the number of orders.
  2. Allocate indirect costs using sales revenue.
  3. Compare the outcomes of the two allocation methods.
  4. Discuss the importance of accurate cost allocation in the food industry.