Using this form, you can add a new cost allocation setting that will be used as a rule in allocations.

The Cost Allocation Settings (create) form

By using the form, you can specify the conditions (filters) defining the data to be allocated and settings (allocation rules) to be applied to this source.

Conditions

In the Period field, select the period in which this setting (allocation rule) is applicable. If no settings can be found for the current period, the settings with the latest period will be used.

The conditions defined under the Conditions heading specify the source of expenses to be allocated.

In the Entity field, specify the entity to which these settings are applicable. If no details below – such as department involved, section on COA, or particular GL account – are specified, the balances of all expense accounts associated with the selected entity will be processed as defined by the rule under the Settings heading (to the right).

In the Department field, you can select a particular department associated with the allocation source. You can select a department of the specified entity or any department if no entity is specified. If no department is selected, the data of all departments will be used.

In the Account Type field, you can select a section on the chart of accounts which defines the allocation source. If no details below are specified, the balances of all accounts of this COA section associated with the selected entity and department will be allocated.

In the Account field, select a particular account from the selected COA section to serve as the allocation source.

If you have selected an account of the expense type, in the Expenses Item Type and Expense Item fields specify the type of the expense items and a particular expense item of the type to further filter the data to be used as the allocation source.

If you have selected an account of the income type (in such sections as PL Revenue, PL Other Operating Income, PL Finance Income, PL Non-Operating Income), in the Income Item field, select an income item for allocation.

Settings (Rules)

Using the fields under the Settings section you can specify whether the source amount should be allocated and how.

If you do not intend to allocate the source amount to multiple targets, select the Close Directly to Profit and Loss option – and the amount defined by Conditions will be transferred directly to one of the profit or loss accounts without allocation.

In the Profit and Loss GL Account for Allocation field (which is enabled if the Close Directly to Profit and Loss option is selected) specify a GL account to which this source amount will be transferred without allocation. You can select an account from the PL Profit or Loss section.

If you do need to allocate the source amount to multiple targets, make sure the check box for the Close Directly to Profit and Loss option is cleared – this enables the fields below.
In the Cost Allocation Method field, select a method to be used to allocate this source amount. There are several predefined methods available, generally they are used for allocating indirect costs to PL accounts. 

Select the Department Wise Allocation option, if you need to narrow the base by specific department only, that is, by department selected under the Conditions heading on the Allocation Settings form. With this option selected in case of the To the financial result GL account based on gross profit method, the expenses will be allocated to the Profit or Loss account proportionally to profits earned by this department in the business activities in which it participated. 

In the Expense Item for Allocation field, you can select a particular expense item to consolidate the allocated amounts with other (related) expense items. For example, if you record gas costs on per vehicle base, you can allocate all such expenses under the Transportation Costs expense item. If no expense item is selected in this field, the expenses will be allocated according to the expense items of the source.

The toolbar buttons

Click the Save button to save the new set of cost allocation settings or the Save and close button to save it and close the form.