Using this form, you can review an available allocation method or add a new allocation method. Allocation methods are used by Allocation Settings.

The Cost Allocation Method (create) form

In the Description field, type a brief description of a cost allocation method.

<Auto> in the Code field indicates that the system will assign a unique identifier to the new cost allocation method once you save it.

In the Data Source field, select one of the following predefined sources of data to be used by this allocation method as the base for allocation:

• To the financial result GL account based on revenue
• To the financial result GL account based on gross profit
• To the financial result GL account based on sales volume
• To the financial result GL account based on cost of goods sold
• To the production cost GL accounts based on revenue
• To the production cost GL accounts based on actual production costs

Using this data as the base, the application will calculate the proportion in which it will allocate the specific amounts. For example, cost of goods sold within different business activities can be used as the base for allocating the electricity bill amount.

Note. The data sources are predefined; however, you can define new data sources if you need. For details, refer to The Bases for Allocations.

Select the type of allocation by using the Allocation To buttons:

• Cost of Goods/Services: Allocations of this type will distribute the overheads to costs of produced goods registered on the corresponding accounts and indirect costs to some costs of services account. Selecting this allocation type makes the Cost of Services GL Account for Allocation field available.
• Profit and Loss: Allocations of this type will distribute the specific expenses and overhead costs to business activities as dimensions of the Profit and Loss GL account in proportion defined by the selected allocation method. Selecting this allocation type makes the Profit and Loss GL Account for Allocation field available.

Depending on the selected type of allocation, select the account to post the resulting amounts:

• Profit and Loss GL Account for Allocation: The source amounts will be allocated to business activities as dimensions of the account.
• Cost of Services GL Account for Allocation: The source amounts will be allocated to the selected Cost of Services or Production Costs accounts.

Use the Detailed Description text box to provide the detailed recommendations when to use this method.

Click the Save button to save the changes to the available method or the new allocation method or the Save and close button to save the allocation method and close the form.