The corporate controller is mulling over the issue of allocating the costs of distribution. Several allocation schemes are possible:1. Allocate all distribution division costs based on gross sales of the LOBs.2. Allocate all distribution division costs based on LOB profits.3. Allocate the direct costs of each shipment (driver, fuel, truck depreciation, tolls) using the gross weight of each LOB’s product in the shipment. Then allocate the other costs of the distribution division (schedulers, management, telephones, etc.) using the total direct shipping costs assigned to each LOB.One argument against allocating is that it will distort relative profitability. The controller says, “Because allocations are arbitrary, the resulting LOB profitabilities become arbitrary.” Another argument is that it is not fair to charge managers for costs they cannot control. LOBs cannot control shipping costs. For example, there are savings when two small separate shipments are combined into a single large shipment. LOBs will tend to avoid opening up new sales territories when other Telstar products are not being shipped to that area.