Assessment Allocation in Cost Center

Allocation is a way to divide cost occured in a cost center or a group of cost centers to another cost centers based on an estimation. The estimated value can come from production units such as labor or machine hours. To divide an overhead cost , the estimated value can come from the smallest measurement such as KiloWatt for electricity or M3 for water.

There are 3 ways of allocations in cost center :

1. Direct or manual allocation
2. Distribution
3. Assessment

This time we will focus only on assessment. Assessment allocation can be use to allocate values from one cost element without changing the posted original value it self. It is possible to do so by using secondary cost element instead of primary ones.

For example :

You want to allocate expense which occurs on the cost element Salary Expenses, without changing the original value posted in the cost element. To do so, you will have to create a secondary cost element, say Allocated Salary Expenses.

The posting will be as shown below :

Dr. Allocated Salary Expenses (Cost Center Receiver)

Cr. Allocated Salary Expenses (Cost Center Sender)

While the amount in Salary Expenses remains the same.

List of tcodes to be used :

• KSU1 - Create Cycle
• KSU2 - Change Cycle
• KSU3 - Display Cycle
• KSU5 - Run Cycle

In creating a cycle of allocation, we need to define :

• Secondary Cost Element
• Primary Cost Element as the source of value to be allocated. Note that allocation can be done from one or more cost element. We can combine some cost elements based on the characteristic and summarized it with one secondary cost element.
• Sender Cost Centers
• Receiver Cost Centers
• Value to be allocated by sender. It can be maintained at the sender rule. There are 3 options available : Posted amount, Fixed Amount, Fixed Rates.
• Value to be received by receiver. It can be maintained at the receiver rule. There are 3 options available : Variable Portions, Fixed Percentage, Fixed Amount and Fixed Portions. If we choose Variable Portions, we need also to define the variable. There are several options,