a) Mansard Hotels has five luxury hotels located in Boston, New York, Chicago, San Francisco, and Los Angeles. For internal reporting purposes, each hotel has an income statement showing its revenue and direct expenses. Additionally, the company allocates to each hotel a share of general administrative and advertising costs (e.g., salary of the company president, salary of the company CFO, hotel chain advertising, etc.) based on relative revenue.
Required:
1. Write a paragraph explaining why the allocation of general administrative and advertising costs to the specific hotels is potentially useful or potentially harmful.