Internal Accounts Allocation
This process is used to allocate actual and budgeted costs and revenues between accounts, cost centers and other accounting dimensions in cost accounting. This way, internal accounts allocations can be reported separately. Otherwise, the procedure is identical to that of creating external accounts allocations.
The allocation is specified in a percent and occurs within a specified amount of time. A debit and credit transaction is created for every allocation.
Before you start
- Accounting dimensions for allocations are defined in 'Accounting Identity. Open' (CRS630)
- The 'External/internal transactions' check box is selected in 'Settings - General Ledger' (CRS750)
- Voucher number series for the internal allocations is defined in 'Voucher Number Series. Open' (CRS410)
- A FAM function CA03 is defined in 'FAM Function. Open' (CRS405).
Follow these steps
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Defining Allocation Base Table
In a base table (From table) the accounts and cost centers from which the allocations should take place are defined. You do this in 'A/C Allocation Base Table. Open' (GLS060).
The parameters can be changed at a later time in 'A/C Allocation Base Table. Open Lines' (GLS061). The program is activated by selecting option 11 for the allocation base table in 'A/C Allocation Base Table. Open Lines' (GLS060/B).
Defining Allocation Target Table
A target table (To table) provides the allocations in fixed percentages and specifies which accounts and cost centers the allocations should take place in. Offset accounting is also carried out here. The same percentage is used for every allocation period. Allocation target tables are defined in 'A/C Allocation Target Table. Open' (GLS062).
The parameters can be changed in 'A/C Allocation Target Table. Open Lines' (GLS063). The program is activated by selecting option 11 for the allocation target table in 'A/C Allocation Target Table. Open' (GLS062/B).
Defining Allocation Selection Table
Allocation selection tables are used for defining dynamic/variable percentages for allocations, in contrast to the fixed percentages used in allocation target tables. Allocations can be generated from:
1. Other balances in the general ledger during the current accounting period. (For example: freight charges that are allocated amongst departments based on total recorded sales)
2. Resource drivers. (For example: allocation of electricity costs based on machine time, when machine time is a resource driver.)
You define selection tables in 'A/C Allocation Selection Table. Open' (GLS064).
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Connection of Allocation Tables
Allocation base tables, target tables and possibly allocation selection tables that can be linked together are specified in an account allocation template. The connection is listed in 'A/C Allocation Template. Open' (GLS070).
An account allocation template consists of one or more lines, known as allocation elements. Each of these specifies a set of tables for allocations. The elements are defined in 'A/C Allocation Template. Connect Elmnt' (GLS071).
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Internal Allocation
Internal allocations are done in 'Internal Allocation. Calculate' (CAS130). The period the allocation refers to and whether or not the proposal is to update the general ledger is entered here. The internal transactions can be checked in 'General Ledger. Display Transactions' (GLS210) after the general ledger has been updated.
Examples
A company wants to allocate the payroll department's costs internally.
The payroll department has overhead costs in class 6 and payroll expenses in class 7 as displayed below:
| Dim. 1 | Dim. 2 (cost center) | Amount |
|---|---|---|
| 6110 | Salary | 100000 |
| 6250 | Salary | 60000 |
| 7210 | Salary | 40000 |
One or more intervals are provided as the foundation for the base table:
Allocation table
| Dim. 1 | Dim. 2 | Dim. 3 | Dim. 4 | Dim. 5 | Dim. 6 | Dim. 7 |
|---|---|---|---|---|---|---|
| 6000 | Salary | |||||
| 7999 | Salary | 9999 | 9999 | 9999 | 9999 | 9999 |
All transaction entered in accounts 6000-7999 and with cost center Salary will then be selected.
The costs are entered in the same way as the original transactions with the exception that the liability is changed. The offset looks identical to the original transaction. This is displayed in the target table below.
Allocation Target Table
The payroll department's costs are to be allocated between production and sales according to the following:
| Dim 1 | Dim 2 | Dim 3 | Dim 4 | Dim 5 | Dim 6 | Dim 7 | % |
|---|---|---|---|---|---|---|---|
| = | Prod | = | = | = | = | = | 60 |
| = | = | = | = | = | = | = | –60 |
| = | Sales | = | = | = | = | = | 40 |
| = | = | = | = | = | = | = | –40 |
Internal Allocation
The outcome of the allocation is as follows:
| Dim. 1 | Dim. 2 (cost center) | Amount |
|---|---|---|
| 6010 | Prod | 60000 |
| 6010 | Sales | 40000 |
| 6010 | Salary | –100000 |
| 6250 | Prod | 36000 |
| 6250 | Sales | 24000 |
| 6250 | Salary | –60000 |
| 7210 | Prod | 24000 |
| 7210 | Sales | 16000 |
| 7210 | Salary | –40 000 |
In this case the company has chosen a fixed percentage allocation. For an allocation based on dynamic/variable percentages an allocation selection table must be defined. The table identity is then used instead of the percentage in the allocation target table.