Allocation Rules

Overview

Some expenses may require an allocation of costs from general cost centres across selected products, e.g. allocation of direct selling expenses to a number of products on a percentage allocation basis.

Normally, allocations of costs use allocation-in and allocation-out accounts. In IFP, the allocation process consists of copying data from one file into another file using a code conversion table.

Rule Types

The Code Conversion tables will generally Allocate-In and/or Allocate-Out values as well as setting some rows to Zero:

• A zeroing rule uses a Factor of 0.0000 to clear any existing allocations for the code specified, usually in preparation for new allocations to be put in place.
• The following rules for the same code will be applied using the Factor of each rule e.g. rule number 5 applies a Factor of 0.1000 to the Target Code using the Product W31, this is 10% of the code being allocated. All rules for a specific Source Code must have factors that sum to a value of 1 (100% of the products being allocated).

Code Conversion Table

In the example below, total field selling expenses have been planned under the general cost centre, FIELDHRT. The BU director wishes to allocate 10% of total expenses to product W31, 50% to W32 and 40% to W35.

1. From IFP Home select Codes Maintenance > Code Conversion Tables
2. Select the required folder and Add a new conversion table
3. Give the conversion table a name and set both the Source Code and Target Code lengths to the item code length for the database.
   
4. Rules for this conversion table should be created using those for the FIELDHRT cost centre below as an example.
   
• The first rules in the conversion table should clear any existing allocation accounts for that cost centre Lines 1 and 2
• Line 3 then copies the data for all the cost centre
• A rule should then be setup to transfer the full amount to the allocation out account (line 4)
• Lines 5 to 7 allocates the cost over the required products. For example the FIELDHRT cost centre will be split in the following way:
• 10% allocated to W31
• 50% allocated to W32
• 40% allocated to W35

Applying Allocations

Once you have completed the conversion table you should apply these allocations by copying from one data file to another, whilst ensuring you have selected the conversion table containing these allocation rules on the Advanced Options tab of the Copy Data File Options screen.

Warning: Make sure that you select Value in Apply Conversion Factor to, otherwise costs may not be allocated correctly.