Allocations source percentage
When setting up TrueCost allocation rules, you can specify only a certain percentage of the total expense, or source amount, to allocate to a group of cost objects.
Ratio = (source%) x ((Di ×Wi)/(∑n(Di×Wi)))
For example, the surgery team spends time on three types of patient care.
This time is estimated by percentages:
- Preoperative testing of scheduled future surgery patients (20%)
- Perioperative care of current surgery patients (70%)
- Postoperative care of recently discharged surgery patients (10%)
Instead of allocating 100% of the surgery team's labor expenses to all cost objects, three allocation rules are created to allocate the appropriate percentages of the total labor expenses to the preoperative, perioperative, and postoperative cost objects.
Continuing this example, consider the driver events data in TrueCost indicates that on the specified event date the surgery
team performed these procedures with a total expense of $10,000. Assume the values in this
table have been calculated for the volume part of the equation for each cost object (Di
×Wi)/(∑n(Di×Wi)).
| Cost object | Source % | (Di ×Wi)/(∑n(Di×Wi)) | Percent to allocate ratio = (source %) ((Di ×Wi)/(∑n(Di×Wi))) |
Balance to allocate |
|---|---|---|---|---|
| Preoperative | ||||
| Cost Object 1 | 20% | 65.39% | 13.078% | $1,307.80 |
| Cost Object 2 | 20% | 34.61% | 6.922% | $692.20 |
| Perioperative | ||||
| Cost Object 3 | 70% | 43.24% | 30.268% | $3,026.80 |
| Cost Object 4 | 70% | 56.76% | 39.732% | $3,973.20 |
| Postoperative | ||||
| Cost Object 5 | 10% | 77.63% | 7.763% | $776.30 |
| Cost Object 6 | 10% | 22.37% | 2.237% | $223.70 |
| 100% | $10,000.00 |