Creating cost allocation basis

This page allows you to create an allocation basis by which costs from source cost centers can be distributed among target cost centers. Tell me more.

Select the “Create Allocation Basis” link from the “Create Allocation” page.

The “Create Allocation Basis” page appears.

The system displays the following:

Run No	The number identifying all the sequence of allocations that have been defined on a finance book for a particular accounting period.
Sequence No	The number identifying the particular allocation of the entire sequence of allocations that has been defined on a finance book for a specific accounting period.

Note: To enter allocation basis details, the combination of the run number and the sequence number displayed above must be in “Active” status.

Status	The status of the allocation which must be “Active”.
Finance Book	The code identifying the finance book that has been mapped to the run number.
Accounting Year	The accounting year in which the cost allocation is taking place.
Accounting Period	The accounting period present within the accounting year in which the cost allocation is taking place.

Note: The accounting period displayed here must be in “Open” status.

Source Cost Center

The code identifying the cost center from which the cost is allocated.

Note: The source cost center displayed here must be valid for the run number, sequence number, accounting period and the finance book.

Description	The description of the source cost center.
	Zoom facility available.
Target Cost Center From	The starting code in the range of codes identifying the cost centers to which the cost is transferred.
To	The ending code in the range of codes identifying the cost centers to which the cost is transferred.

Enter the following field:

Basis Weightage	Use the drop-down list box to select the method in which the cost from the source centers is distributed among target cost centers. You can select from “Percentage”, “Ratio” or “Cumulative”.
	Ratio – indicates that the cost is distributed to the target cost centers by means of ratio.
	Percentage – indicates that the cost is distributed to the target cost centers by means of percentage.
	Cumulative – indicates that the cost is distributed to the target cost centers on a cumulative basis.
	The system displays “Percentage” by default on launch of the page.

Enter the following fields in the “Allocation Basis” multiline

Cost Element	The code identifying the target cost element that has been mapped to the target cost center (Alphanumeric, 32). The cost element entered here must have been mapped to the target cost element.
	Help facility available
	Press the <Enter> key.
	The system retrieves and displays the UOM code.

Note: Atleast one valid cost element value should be present in the multiline and should not be duplicated.

The system displays the following:

UOM Code

The code identifying the unit of measurement.

Note: The unit of measurement is displayed in this field only if the cost element is of type “Allocation Cost Element” or “Activity Cost Element”.

Enter the following fields in the “Allocation Basis” multiline

Quantity/Value	Use the drop-down list box to specify whether the cost is distributed to the target cost elements based on value or ratio. You can select from “Quantity”, “Value” or “Blank”.
	Quantity – indicates that the cost is distributed to the target cost elements based on quantity.
	Value – indicates that the cost is distributed to the target cost elements based on value.
	The system displays “Blank” by default on launch of the page.

Note: If the cost element specified for this row has been specified as an “Allocation” cost element, then the value entered in this field should be “Quantity”.

If “Cumulative” has been selected in the “Basis Weightage” field then the values selected in all the rows of the multiline should be same.

If “Cumulative” has been selected in the “Basis Weightage” field and “Quantity” has been selected in this field then the “UOM Code” of all the rows of the multiline should be the same.

Actual/Budget	Use the drop-down list box to specify whether the allocated cost is actual or budgeted. You can select from “Actuals”, “Budget”, “Space” and “Blank”.
	Actuals – indicates that the allocated cost is the actual cost incurred by the cost center.
	Budget – indicates that the allocated cost is the budgeted cost incurred by the cost center.

Note: The values “Actuals” and “Budget” will be available for selection only if “Actuals” has been selected in the “Allocate On” field in the main page. The system defaults blank in this case, on launch of the page.

The values “Budget” and “Space” will only be available for selection if “Budget” has been selected in the “Allocate On” field in the main page. The system defaults “Space” on launch of the page.

Budget No	The number identifying the cost budget that has been mapped to the target cost center and cost element (Alphanumeric, 10). This value must have been defined in the “Cost Budget” business component for the business unit and within the start date and the end date of the accounting period and must be in “Authorized” status.
	Help facility available

Note: This field should not be left blank if “Budget” or “Both” has been selected for the allocation in the “Allocation On” field of the main page.

The type of the budget number entered here must be “CC-CE”, period budget of type ‘both’ or ‘value’.

Also, the budget number entered here should be valid for the basis cost element and the target cost center.

Ratio/Percentage

The ratio or percentage of cost to be distributed to the cost element (Decimal).

Note: This field should not be left blank and value entered should not be greater than zero if “Cumulative” has been selected in the “Basis Weightage” field.

If “Percentage” has been selected in the “Basis Weightage” field then the sum of the values of this field in the mutiline must be equal to 100.

If “Ratio” has been selected in the “Basis Weightage” field then the sum of the values of this field in the mutiline must be equal to 1.

Click the “Create Allocation Basis” pushbutton to create the allocation basis for the target cost elements.

Reset Ratio/Percentage Values

The system saves the allocation basis and nullifies the ratio/percentage values that have already been set for the target cost center and cost element.

Allocation Basis Flag Updation

The system updates the “Allocation Basis” flag to “Yes”.

The system displays the following:

Created By	The login ID of the user who created the allocation basis.
Created Date	The date on which the allocation basis was created.

To proceed, carry out the following

Click the “Attach Notes” link at the bottom of the page to record observations.

Creating cost allocation basis – An overview

The allocation basis can be for another cost incurred by the target centers or a non-cost figure booked for target centers against allocation of cost elements. You can create cost allocation basis consisting of “Normal”, “Activity” as well as “Allocation” cost elements.

The allocation basis supports multiple parameters for allocation. You can specify whether the allocation distribution is done by means of ratio, percentage or cumulative. For every basis cost element, you can also specify whether cost allocation is done based on quantity or value. If the basis cost element is a normal or an activity cost element then the allocation can be done based on value also. On the other hand, if the cost element is an allocation cost element then the allocation is done based on the quantity only, like number of employees or the number of man hours of service.

Based on the parameters specified in allocation basis, the percentage of amount to be distributed among target cost elements is derived. The parameters specified in allocation basis overwrite the parameters specified in the allocation details that is, the allocation details once specified will take precedence. But the target cost elements specified in allocation details remains the same. The system saves the allocation basis and nullifies the ratio/percentage values that have already been set for the target cost center and cost element. The system also updates the “Allocation Basis” flag to “Yes”. The system also updates the login ID of the user and the system date along with the creation details.