What are the danger in allocating common fixed cost among product lines or other segments of an organization?

Allocating common fixed costs among product lines can distort profitability analysis and decision-making, as it may lead to misinterpretation of a product's financial performance. This can result in underestimating or overestimating the true costs associated with specific products, potentially leading to misguided resource allocation or product discontinuation. Additionally, it may create conflicts between segments, as each may seek to minimize its allocated share of fixed costs, undermining overall organizational strategy.