Allocating Across Multiple Departments

You can use Corporate Allocations to apportion costs across a number of departments automatically. You could apportion the costs on a fixed percentage basis, or a relative percentage basis according to other values held in the system, for example, floor space or production quantity values.

For example, all marketing related costs might be posted in total to a group marketing account with the type of cost identified in an analysis code. One type of cost might be advertising. You might wish to apportion advertising costs across two departments automatically, using fixed percentages. To do this, you must identify the advertising costs for the marketing account as the allocation source, and use an allocation ratio to maintain the fixed percentage to be allocated to each department.

The following steps are required to apportion a total cost using fixed percentages:

  1. Create a memo account to maintain the allocation percentages for each department.
  2. Ensure that an analysis dimension has been assigned to the ledger transaction entity to maintain the department codes. See Assigning Analysis Dimensions to Entities in the Business Unit Administrator Guide / Help.
  3. Use Ledger Entry to post a transaction to the memo account identifying each department's percentage. Enter the relevant department code into the appropriate analysis dimension on the transaction. See step 2.
  4. Set up an allocation source that identifies the marketing account. If you need to allocate only some of the postings to this account, you must also identify the transactions to be allocated using analysis code selection criteria. For example, you may only require advertising costs to be allocated.
  5. Set up an allocation ratio identifying the memo account that contains the allocation percentages, and select the Absolute Percentage Ratio Basis option. Also, to save having to update the memo account every time allocation is run, we could specify a Ratio Amount of Balance.
  6. Set up an allocation target to identify the accounts to be updated.
  7. Set up an allocation to identify the source, target and ratio definitions.