About Overhead Allocation
The Cost Allocation feature allows you to automatically allocate overhead and/or indirect costs to equipment, charging equipment cost accounts and crediting other specified accounts.
Allocations can be run on a monthly basis, or for any other applicable time frame.
There are three basic Cost Allocation steps:
- Use the EM Allocation Codes form to create the allocation codes - Define if the allocation will be made to all equipment, selected pieces of equipment, or to a range of equipment selected when the allocation is processed. The basis of the allocation can be revenue/usage hours or dollars, cost dollars, or based on a specified user numeric variable in the Equipment (EMEM) file. You can specify a rate for the allocation, designate a flat amount that is prorated to the equipment according to the basis, or have the system pull the allocation amount from a user-defined field on the EM Equipment form. Costs can be allocated to a specific cost code or cost type. If the calculation basis is Cost, you can either designate a specific cost code/cost type, or have costs allocated to the cost codes/cost types assigned to the basis.
- Process the cost allocations using the EM Process Cost Allocations form - This will create the adjustments in a new EM Cost Adjustments batch - When cost allocations are processed, the system creates cost adjusting entries for the equipment, cost code, and cost types specified in the allocation setup.
- Post the cost allocations using the EM Cost Adjustments form - Edit an then post
the adjustments using the EM Cost Adjustments form before the batch is posted.
The following diagram illustrates the allocations process:
