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Generally, allocations are performed automatically by the Month-End Closing service tool. However if needed, you can manually allocate specific costs by creating a corresponding document on the Accounting > Service Tools > Manual Cost Allocations form.

When creating a new manual allocation, you can select a specific account (from the Expenses section on the chart of accounts or from the Work in Progress subsection of the Assets section) and specify the source amount which you need to allocate. Then you can select multiple target accounts and for each specify the amount to be moved to it. The sum of allocated amounts must be equal to the source amount.

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• Accounting > Master Data > Cost Allocation Methods
• Accounting > See also > Cost Allocation Settings

Allocation Methods

In FirstBIT ERP, there are multiple predefined allocation methods. You can use the Accounting > Master Data > Cost Allocation Methods form to view all the available methods and to add new methods.
Generally, an allocation method defines how to allocate specific source amounts. 

Allocation methods are divided by the type of allocation into the following two groups:

• Cost of Goods/Services: The source amount is distributed to the selected account of the Expense type by Item. For example, methods of this type can be used to allocate indirect and overhead costs (including work in progress) to finished goods in specific proportion calculated based on the source data, such as production volumes of particular items or direct costs of these items in the current period to be closed.
• Profit and Loss (почему не To the Financial Result GL Account??): Allocation is performed to the selected account of the Income type (from the Profit or Loss section of COA) by Business Activity, that is updates the Profit and Loss Account / Business Activity records. For example, methods of this type can be used to allocate specific expenses not assigned to any business activity (such as the sales office rent) in proportion of resulting gross profits in business activities, or in proportion of costs of goods sold within each business activity, and so forth.

As a measure for an allocation base, amount or quantity can be used, such as quantities of the finished goods produced, machine hours used, kilowatt hours consumed, or square footage occupied.

In FirstBIT ERP, most of predefined allocation methods are of the Profit and Loss allocation type. In allocations of this type, the source amounts are distributed proportionally to specific values calculated per business activity. For example, the available predefined methods use the following bases for calculating the allocation proportion:

• Sales Volumes calculated for business activities ("To the financial result GL account based on sales volume")
• Revenues calculated for business activities ("To the financial result GL account based on revenue")
• Costs of Goods Sold calculated for business activities ("To the financial result GL account based on cost of goods sold")
• Gross Profits calculated for business activities ("To the financial result GL account based on gross profit method")

Generally, the base or the data for proportion calculation is a structure of the following records: GL Account / Department Entity / Expense Item or Income Item / BusinessActivity / Item / Amount. (Entity?/ Expense Item?)

For more details, see Bases The Bases for Allocations. If the Production module is enabled in your application, you can easily create allocation methods of the Cost of Goods/Services type based on the available predefined data sources.

Cost Allocation Settings

Using the Accounting > See also > Cost Allocation Settings form, you can specify particular GL accounts (more precisely, records structured as GL Account / Department / Entity) to be used as source of amounts for allocation and which allocation methods should be used for these sources. You can use the predefined allocation settings, edit them, or define new settings. If there are more than one settings for the same GL account or account section, the latest settings will be used.

Balances of some accounts you can move without allocation to another accounts - for this you can select the Close Directly to Profit and Loss option and specify the particular target account from the Profit and Loss section on the chart of accounts, COA.

For accounts which balances you want to actually allocate, make sure that a check box for the Close Directly to Profit and Loss option is cleared – this enables the fields you need to specify the allocation rules.

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For more details on allocation settings, refer to Allocation Settings.

Execution of Allocations

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