Enhancing Overhead Allocations with Allocation Structure

Objectives

After completing this lesson, you will be able to:

  • Explain what allocation structures are used for
  • Manage and use allocation structures

Allocation Structures

To make the allocation even more precise, it could be beneficial to separate costs on distinct G/L accounts according to the type of costs initially posted on the sending object. This provides a more detailed level of analysis for the responsible managers. Using allocation structures helps you do just that.

Definition

An allocation structure is a structure where you have mapped primary and secondary cost elements to a secondary cost elements. It allows you to post to multiple overhead allocation accounts in a single segment.

Note
An allocation structure can be used for cost centers as well as WBS elements (and where available, internal orders).

Configure an Allocation Structure

To configure an allocation structure that can be used in allocation cycles (overhead allocation or intercompany allocation), you perform the following steps:

Using the Manage your solution app, in the Application area Finance, Sub Application area Overhead Cost Management, configuration step 2-Maintain Allocation Structures:

Steps

  1. To create a new allocation structure, choose the New Entries button.

  2. Fill out the Allocation Structure field with your preferred ID and Description field to identify your new allocation structure.

  3. In the Assignments section in the dialog structure, create Assignment Categories.

  4. For each Assignment, designate which cost elements will be included as a Source. This can be done by entering one or multiple cost element groups, individual cost elements, or a range of cost elements.

  5. Then, choose the appropriate Assessment Cost Element that will be used to credit the sender and debit the receiver.

  6. After completing your entries, choose Save to store the defined allocation structure .

Result

Note
You can also copy an allocation structure using the Copy As button.

Changes to your allocation structure will not affect past allocations. However, it will influence your future cost distribution, cost center planning, and so on.

Perform an Overhead Allocation using an Allocation Structure

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