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Components of Corporate Allocations |
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Sun Documentation -
Corporate Allocations
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Page 1 of 2 Corporate Allocations uses allocation setups to generate a series of journal transactions.
An allocation setup can contain the following components: - an allocation source which identifies the costs or charges to be apportioned.
- an allocation target which identifies the target account to which the costs or charges are to allocated.
- an allocation ratio which identifies the proportion of the source that is to be allocated to the target, if required.
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Tip: An allocation generates balancing journal transactions to keep the ledger in balance. The balancing transaction is posted to an offset account which is identified on either the allocation source, or allocation target, depending on the type of allocation being run.
These three allocation components are identified for each of the following example allocation requirements.
Requirement | Allocation Source | Allocation Targets | Allocation Ratio | To allocate $5000 of the marketing costs to International Sales Division. | Marketing Costs | Target: International Marketing costs
Offset: Marketing Costs Recovered | Fixed amount of $5000 | To allocate 30% of marketing costs to Sales. | Marketing Costs | Target: Sales marketing costs
Offset: Marketing Costs Recovered | Fixed Percentage of 30% | To allocate a proportion of office costs to Sales according to the ratio of Sales department floor space to the office total floor space. | Head Office Total Costs | Target: Sales head office overheads
Offset: Head Office Costs Recovered | Relative Percentage based on Sales floor space as a percentage of Total floor space. |
Notice that the allocation ratio is not restricted to a predefined percentage. The ratio can also be expressed as a fixed amount, or a relative percentage determined by any other statistical or financial values held in the ledger. |
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