Mixed allocation
A mixed allocation uses any combination of fixed percentages, fixed factors, and dynamic factors. You can use a mixed allocation when a portion of the allocation has a fixed percentage applied to it and other parts of the allocation vary based on some factor. A mixed allocation allocates the full amount of the pool. Fixed percentages are applied first, then the remaining pool balance is allocated based on factors.
Example
Moose Wood Outfitters wants to allocate 50% of the overhead costs to the St. Paul store because it just opened. They want to allocate the remainder of the overhead costs to the Chicago and Denver stores based on square footage. The pool of overhead costs to be allocated is $100,000.
| Activity | Driver | Pool balance | Allocation |
|---|---|---|---|
| St. Paul store | 50% fixed percentage | $100,000 | $50,000 |
| Chicago store | 35,000/60,000 = 58.3% | 50,000 | 29,150 |
| Denver store | 25,000/60,000 = 41.7% | 20,850 | |
| $100,000 |