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In order to keep things proportional you would have to use the formula (individual sales/total sales)*total expenses. Refer to table 1-1. I also think that the cost of the warehouse space should be allocated by the amount of space each department occupies. Bicycles 25% and Unicycles 75% .
What would be some of the issues of too many expenses or too little expenses being allocated to each of the businesses?
The biggest issue I see of improper allocation of the funds is in the accuracy of the budgeting in the upcoming years. If the sales of bicycles goes up and the sales of unicycles goes down then it would be ease to reallocate the expenses according to how much each is selling and how much space they are using in the warehouse...
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