Allocation of indirect cost to Direct Shop by...

[former_member267488]

Dear Experts,

We are going to introduce new work center ie., direct shop but that contains more machines than man hour.

Earlier we had three shops which contains Man hour as routing and common expenditure are allocated (by Assessment) to threes shop based on Man Hour basis based on confirmation of Production Order during the Month.

so. three shop (man hour based) one new shop (Machine based).

How to allocate my common expenditure to four shop. If by man hour based means, the shop which has more machines (ie., less man hour) allocated very small amount.

Request routing setting method for new shop which has more machines.

Thanks.

SD

[alex_marasigan]

Hi Dandapani,

If understood correctly your question, you want to allocate the common expenditure based on man-hour, therefore, the common expenditure amount is your sender amount and the man-hour is your distribution rate. This means that the expenditure will be distributed to the four work center. The distribution would depend on your man hour. For example, your expenditure amount is 500 and your man hour for cost centers are A=10, B=20, C=30 and D=40, therefore, the expenditure amount is to be distributed as follows:

A = (500 * 10/100) = 50
B = (500 * 20/100) = 100
C = (500 * 30/100) = 150
D = (500 * 40/100) = 200

If I misunderstood your question kindly provide further explanations (tables, data etc.) for us to properly address your concern.

Best regards,
Alex