Allocation Methods and Calculations
Cost Allocation
The total material cost for the PO or TO will be determined and the proportion of each PO/TO line's material cost to the total material cost for the PO/TO will be determined. The estimated landed cost amount will be distributed across all PO/TO lines using the same proportion to determine the landed cost amount to be applied to the PO/TO line.
TO total material cost - overridden material cost = 1000
Estimated landed cost - overridden landed cost = 300
TO line material cost = 100
% TO Line to total = 100 / 1000 = .10
TO line landed cost = .10 * 300 = 30
TO line unit cost = 30 / PO line qty ordered
Weight Allocation
The total weight for the PO/TO and the proportion of each PO/TO line's weight to the total weight is determined. The estimated landed cost amount is distributed across all PO/TO lines using that proportion.
PO total weight - overridden PO weight = 2000
PO line weight = 40
Estimated Landed Cost - overridden landed costs = 200
% PO line wt to total = 40 / 2000 = .02
PO Line landed cost = .02 * 200 = 4
PO Line unit cost = 4 / PO line qty ordered
- Zero weight line items will not have any landed cost assigned.
- Weight allocation will be disallowed if all PO lines have zero weight.
- Weight U/M's will be ignored when weights are being totaled. For example: 1 kg + 5 lbs = 6.
- You will receive a warning during the Allocation Activity if multiple weight U/M's exist on the PO/TO.
- The Allocation Activity will use the Base Quantity in all calculations.
Unit Allocation
The total number of units for the PO/TO will be determined and the estimated landed cost amount will be divided by that total to determine the per unit cost.
TO total qty ordered - overridden qty ordered = 1000
Estimated landed cost - overridden landed cost = 2000
TO line unit cost = 2000 / 1000 = 2
- You will receive a warning, if, during the Allocation Activity, the PO/TO line items do not use the same U/M.
- The Allocation Activity will use the Transaction Quantity in all unit calculations.