In this lesson, we explore the concept of Allocation, a crucial processing function within the SAP environment used to distribute key figures from one entity to another using a specified distribution base. Understanding allocation ensures accurate and efficient distribution of values across different entities or datasets.
What Is Allocation?
Allocation is a processing function that enables the distribution of key figures (for example, costs, revenues) from one entity to another based on predefined rules and distribution bases. This function is essential for various financial and operational processes, such as cost allocation, revenue distribution, and resource management.
Key Types of Allocation
- Direct Allocation: Distributes key figures directly from the sender to the receiver based on characteristics and a (cost) driver on the receiver’s side.
- Indirection Allocation: Distributes all key figure amounts from the sender to the receiver using a (cost) driver on the receiver’s side without direct characteristic matching.
- Practical Insight: Consider a scenario where a company must allocate overhead costs from a central department to individual departments based on their respective usage or consumption (for example, square footage for office space, headcount for administrative costs). Allocation provides a systematic approach to achieve this.
In this screen, what we can see are the sender and received tables. In our future demo, we show how to allocate certain values from Sender data over a Receiver data table, based on Ratio.
We are in the position to use direct allocation in this example because both prerequisites are fulfilled:
- There must be at least one common column both on the sender and receiver side.
- All values within that column must correspond between the sender and receiver.
In our example, there are four different values in the Company column (Sunshine, Starlight, Twilight, and Moonlight Holding). We can find the same values in the same column on the receiver side. Technically, using the direct allocation approach, we can allocate Tax Free Income, Capital Gain, Dividend, and Other Income from one Company to the belonging Target Company, based on the values stored in the Ratio column.
In this screen what we can see are the sender and received tables. In our future demo we will show how to allocate certain values from Sender data over Receiver data table, based on Ratio.
We will be in position to utilize direct allocation in this example because both prerequisite are fulfilled: 1. there have to be at least one common column both on the sender and receiver side; 2. all values within that column needs to correspond between sender and receiver
In our example, there are four different values in the Company column (Sunshine, Starlight, Twilight and Moonlight Holding). We can find same values in the same column on the receiver side. Technically, using the direct allocation approach we will allocate Tax Free Income, Capital Gain, Dividend and Other Income from one Company to the belonging Target Company based on the values stored in Ratio column.
Result table in the allocation function always follows receiver table structure. What we can see here is how, for example, how 1000 EUR of Tax Free Income from Sunshine Holding Company was allocated over Sunshine Germany (166.67 EUR), Sunshine France (333.33 EUR) and Sunshine Spain (500 EUR). Total amount of 1000 EUR is still in the company, but just differently allocated over different receiver. As discussed in the previous slide, distribution base field was Ratio field.
Explanation: Summation of the values in Ratio column related with Sunshine Holding Company is 600, divided in the next manner: Sunshine Germany 100, Sunshine France 200 and Sunshine Spain 300. Distribution base was calculated in a backend following the next pattern: for Sunshine Germany 100/600, for Sunshine France 200/600 and for Sunshine Spain 300/600. This ratio was multiplied with the sending amount (1000 EUR). Sunshine Germany :1000 * (100/600); Sunshine France 1000 * (200/600); Sunshine Spain 1000 * (300/600). Same pattern was used for all other Companies and belonging Target Companies.
