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Consider another example. Lets look at small family S, which comprises 1 adult. He buys firewood to heat his home, which contains only himself, for $10. Family A also buys $10 worth of firewood to heat their home. The per-capita consumption of firewood is $10 for household S and $2.5 for household A. However, each member of each household enjoys the same amount of heat – there are economies of scale in heating the room (assume a one room house, since we are talking about poor households here. Maybe the larger household requires more firewood, but certainly not four times as much, if you believe that there are economies of scale here). In this case, the per-capita measure again underestimates the welfare of the larger household.
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One option for adjusting for economies of scale and differing needs of household members is to use the adult equivalent scale, which assigns weights to household members to make the adjustment. More information on the adult equivalent scale can be found here: http://www.oecd.org/LongAbstract/0,3425,en_2649_33933_35411112_1_1_1_1,00.html and here: http://www.google.com/url?sa=t&source=web&cd=1&ved=0CBsQFjAA&url=http%3A%2F%2Fwww7.nationalacademies.org%2Fcnstat%2FPoverty_Equivalence_Scales_Betson_Paper_PDF.pdf&rct=j&q=adult%20equivalent%20scale&ei=uZvrTNCNHYWclgforpm0AQ&usg=AFQjCNHXrcw16y_WDjZIZQbzg0hhJx71qA&sig2=b4PKoKi--xVUvmepS7ICnA&cad=rja
I asked some colleagues about this, and I’ve summarized the discussion below.
The adult-equivalent approach makes sense. It seems that theoretically, adult equivalent consumption should always be used because it is a better estimate of individual welfare, assuming one knows the weights. It adjusts for economies of scale in consumption, as well as the fact that children need to consume less than adults. So adult equivalent does not underestimate welfare as much as per capita equivalent does. However, it has significant disadvantages: 
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1) There is no universally agreed upon standard or empirical way for how to assign weights to the household members. Many just use a best guess.2) Using it would result in inconsistency with other measures of poverty, such as the poverty line, cutoff, etc. We should be consistent with how we have been measuring poverty.
3) It is more complex; it is harder to explain and administer
The per-capita method is simpler and more transparent, even though it may underestimate consumption of larger households. As a general rule, it is best to go with the equivalence scale that is currently in use.