Table of Contents

Cost Allocation

The cost allocations functionality enables you to break down general cost amounts and allocate these amounts to more detailed cost entries. It enables you to specify:

  • to which accounts and with which dimension values the amounts to be allocated have been posted,
  • what allocation method is to be used, and
  • which set of dimensions can be used for cost allocation.

The allocation step is the basic element of the allocation process, and it determines from which account and to which general ledger account the cost is to be allocated. Allocation steps can be combined into allocation sequences.

Defining an Allocation Step

The allocation step is a primary element in the allocation process and it defines the unique allocation source and target. Generally, it is necessary to create multiple allocation steps. It is possible to combine allocation steps to create complex allocation sequences and define in what order they should be processed. To define the allocation step:

  1. Choose the Lightbulb that opens the Tell Me feature icon, enter Allocation Step List, and then select a related link.

  2. On the Allocation Step List page, choose the New action and on the Allocation Step page that opens fill in the following fields:

    On the General FastTab:

  • Code – Specifies the unique code that defines the allocation step.

  • Description – Specifies the text that describes the allocation step.

  • Allocation Method - Specifies the allocation method. The following options are available:

    • Fixed Key - Specifies that the costs are allocated based on a fixed key that specifies a percentage value of the cost to be allocated is to be reclassified to specific target general ledger accounts,
    • Proportional - Specifies that the costs will be proportionally allocated based on the proportion key to the specified general ledger accounts. Select the table and field to be used to calculate the proportion key.

  • Allocation Period - Specifies the period from which the costs to be allocated should be entered. The following options are available:

    • Current Period - Specifies that the costs to be allocated were registered in the current calendar month that is represented by the date specified during the allocation sequence processing.
    • Year to Date - Specifies that the costs to be allocated were registered in the period from the beginning of the calendar year to the date indicated in the allocation sequence processing.

  • Status - Specifies the allocation step status. Only the steps with the Certified status can be included in the allocation sequence with the Certified status.

    On the Allocation Source FastTab:

  • Allocation Account Filter - Specifies the filter for general ledger accounts that contain entries to be allocated.

  • Posting Account Source - Specifies how to reverse the posting of source general ledger entries to be allocated. The following options are available:

    • Entry - Specifies that the posting of source entries will be reversed directly from their general ledger account.
    • Posting Account No. - Specifies that the posting of source entries will be reversed from the general ledger account the number of which has been specified in the Posting Account Source field.
Important

In addition to setting up a filter for the general ledger accounts, it is necessary to specify a dimension filter for source entries. To set up the filter, use the Allocation Dimensions Filter action on the Allocation Step page header. Use the Posting Dimensions action on the Allocation Step page header to define which new dimension set should be used when posting the source entries.

On the Allocation Key Parameters FastTab (that appears only with the Proportional allocation method):

  • Calculation Key Period - Specifies the period from which the entries included in the allocation key calculation are entered. The following options are available:
    • Current Period - Specifies that the entries included in the allocation key calculation are entered from the current calendar month represented by the date specified included the allocation sequence processing.
    • Year to Date - Specifies that the costs included in the allocation key calculation are entered from the period from the beginning of the calendar year to the date specified during the allocation sequence processing.
  • Calculation Key Source - Specifies the table from which the entries included in the allocation key calculation are entered.
  • Allocation Key Base Name - Specifies the table field included in the allocation key calculation.

  1. Complete allocation step lines to define target general ledger accounts and dimension sets that will be used to post entries that were created when the allocation was processed. Columns in the allocation step lines differ depending on the selected allocation method.

    For the Fixed Key allocation method fill in the following fields in every line:

    • Posting Account No. - Specifies the target general ledger account to which the entries will be allocated.
    • Share - Specify how much of the total amount is to be registered in the indicated account. The sum of the amounts in the Share field in all specified lines should be one hundred percent.
    • Percentage - It is a non-editable field and its value is calculated automatically based on values in the Share fields.

  2. Next, set up a new dimension set with which entries will be allocated to target general ledger accounts that have been specified in the lines. To set up a new dimension set for each line, choose the Posting Dimensions action on the Line tab.

Note

All dimensions that have not been set up will be copied unchanged from the source general ledger entry.

For the Proportional allocation method fill in the following fields in each line:

  • Posting Account No. - Specify the target general ledger account to which the entries will be allocated.
  • Application Filter - Specify the cards based on which the system calculates an amount share that will be allocated to the target general ledger account specified in the line. The field changes dynamically based on the value selected in the Allocation Key Source field, for example if G/L Entry is selected, the Application Filter field contains the G/L Account Filter value and if Item Ledger Entry is selected, the Application Filter field contains the Item Filter value.
  • Allocation Key Correction Factor - Specifies the weight of a line.

The Posting Dimensions action can be used in the same way as with the Fixed Key allocation method. If needed, for the Proportional allocation method, use the Allocation Dimensions Filter action in the line. You can define dimension set filters that limit the number of entries included in the calculation of the proportional allocation key basis for a specific line.

Define Allocation Sequence

Allocation sequence can be used to connect multiple allocation steps and define their processing order. Allocation steps are always processed in a specific order - from the top to the bottom. Actions Move Up and Move Down are used to set the sequence of the steps. Steps can be repeated multiple times within a sequence.

To define an allocation sequence:

  1. Choose the Lightbulb that opens the Tell Me feature icon, enter Allocation Sequences, and then select a related link.

  2. On the Allocation Sequences page, choose the New action and on the Allocation Sequence page that opens fill in the following fields:

  • Name - Specifies a unique name of the allocation sequence.
  • Description – Specifies the text of the allocation sequence.
  • Status - Specifies the allocation sequence status. Only sequences with the Certified status will be included in the Post Allocations report.
Note

It is not possible to set the allocation sequence status to Certified, if some allocation steps within this sequence do not have the Certified status. If an allocation step has the Certified status and it is used in a sequence that has the Certified status, you are not able to change the status of this step. To change the status of an allocation step, you must change the status of all sequences in which the step occurs to a status that does not equal Certified.

  1. In the Allocation Step Codes field in the relevant lines, enter codes of subsequent allocation steps that should be included in the allocation sequence. The Allocation Step Description will be populated automatically with a text in the Description field from the allocation step.

Posting Allocations by Sequence

When you post allocated costs, the allocation steps that are defined within the sequence are included. Accordingly, the appropriate cost entries are created in the general ledger for each allocation step. To post allocations, use the Post Allocations action. To post cost allocations:

  1. Choose the Lightbulb that opens the Tell Me feature icon, enter Post Allocations, and then select a related link.

  2. On the Post Allocations page fill in the following fields:

    On the Options FastTab:

    • Posting Description - Specifies the text that will be used as a description in the general ledger entries that were created as a result of the allocation process.
    • Posting Date – Specifies the posting date of the cost allocation processing. The posting date is usually the last day of the month. To simplify date entry, the AssistEdit button can be used. The date is used as a posting date for general ledger entries created as a result of allocation and as a reference for the allocation processing period.
    • Document No. - Specifies the document number. The document number will be used in general ledger entries that were created in the allocation process.
    • Sum Before Posting - Specifies if the general ledger entries created in the allocation process are to be aggregated. Aggregation is based is a posting date, a general ledger source account and a dimension set filter.

    On the Filter FastTab: Sequence Name:

    • Name - Specifies the name of the allocation sequence that the report will create.

    On the Filter FastTab: G/L Entry (non-mandatory fields):

    • Entry No. - Specifies the additional number filter for general ledger entries that are to be included in the cost allocation.
    • Document No. - Specifies the additional filter that is used to filter general ledger entries documents that are to be included in the cost allocation.

  3. Select OK.

Corresponding general ledger entries will be created on the basis of allocation steps included in the allocation sequence.