Allocation

Objective

After completing this lesson, you will be able to the Operating Margin % KPI shows how profitable the organization is but gives no visibility on the profitability of each product category and product. The reason being that indirect expenses like personnel cost are only recorded for all products together. To determine the profitability of each product category and product we will need to allocate the cost to this level based on a relevant driver.

Navigate to Main Menu > Data Actions

Select the Data Action tile under Create.

Enter the following details in the Data Action Settings:
- Name: Admin_Process1
- Description: Admin Allocation Process1

Under the Default Settings section, choose the drop-down for Default Model and select the underlying model that you have created earlier - My Files > PnL_Admin_NEW.

Save the data action by clicking the Save icon in the toolbar then Save.

Select My Files to ensure you are saving to your local directory, name the Data Action PnL_AdminXXX_Process1 with description PnL_AdminXXX Allocation Process1 and then select Save.

Under the Add Step menu, click the Add Allocation Step button.

In the Name field enter Indirect Expenses Allocation.
Under Write Mode, select the option Keep Source.

Under the Allocation Rules section, select the drop-down in the first row under Source Dimension.
Choose Accounts > Default Hierarchy

In the second row under Source Dimension, click the selection button and choose PL 310 Personnel Cost from Select Source Member.

Under the Driver Dimension section, select the drop-down in the first row and choose Accounts > Default Hierarchy

In the second row under Driver Dimension, click the selection button and select PL010 Product Sales from Select Source Member.

Select OK.
Under the Target Dimension section, select the drop-down in the first row under and choose Products > Default Hierarchy

In the second row under Target Dimension, click the selection button and select APL from Select Source Member.

Select OK.
In the third row under Source Dimension, click the selection button and select PL 400 Indirect Expenses from Select Source Member.

Select OK.
In the third row under Driver Dimension, click the selection button and select NF010 Nr Units from Select Source Member

In the third row under Target Dimension, click the selection button and select APL from Select Source Member.
The Allocation Rules should be displayed as follows:

Save the data action by clicking the Save icon in the toolbar then Save.

Navigate to Main Menu > Data Actions

Select the Data Action tile under Create.

Enter the following details in the Data Action Settings:
- Name: Admin_Process1
- Description: Admin Allocation Process1

Under the Default Settings section, choose the drop-down for Default Model and select the underlying model that you have created earlier - My Files > PnL_Admin_NEW.

Save the data action by clicking the Save icon in the toolbar then Save.

Select My Files to ensure you are saving to your local directory, name the Data Action PnL_AdminXXX_Process1 with description PnL_AdminXXX Allocation Process1 and then select Save.

Under the Add Step menu, click the Add Allocation Step button.

In the Name field enter Indirect Expenses Allocation.
Under Write Mode, select the option Keep Source.

Under the Allocation Rules section, select the drop-down in the first row under Source Dimension.
Choose Accounts > Default Hierarchy

In the second row under Source Dimension, click the selection button and choose PL 310 Personnel Cost from Select Source Member.

Under the Driver Dimension section, select the drop-down in the first row and choose Accounts > Default Hierarchy

In the second row under Driver Dimension, click the selection button and select PL010 Product Sales from Select Source Member.

Select OK.
Under the Target Dimension section, select the drop-down in the first row under and choose Products > Default Hierarchy

In the second row under Target Dimension, click the selection button and select APL from Select Source Member.

Select OK.
In the third row under Source Dimension, click the selection button and select PL 400 Indirect Expenses from Select Source Member.

Select OK.
In the third row under Driver Dimension, click the selection button and select NF010 Nr Units from Select Source Member

In the third row under Target Dimension, click the selection button and select APL from Select Source Member.
The Allocation Rules should be displayed as follows:

Save the data action by clicking the Save icon in the toolbar then Save.