Example: Multiple Iterations of a Cost Assignment

In this example, the Information Technology department provides services to the Human Resources department, which provides services to the Information Technology, Production, and Marketing departments.

In the first iteration of cost assignments, the Human Resources department has 90,000 in costs and the Information Technology department has 20,000. The Human Resources department costs are assigned to the three departments as follows:

Department	Cost
Production	50,000
Marketing	10,000
Information Technology	30,000

The total costs for the Information Technology department, which include the original 20,000 and the 30,000 assigned from the Human Resources department, are assigned to the other supporting departments as follows:

Department	Cost
Production	25,000
Marketing	10,000
Human Resources	15,000

This completes the first iteration. However, a residual amount of 15,000 remains in the Human Resources department. If you create a reciprocal assignment, the system continues to assign costs to the affected departments. You can specify the maximum number of iterations that the system should complete before the cost assignment is done, or you can specify the minimum residual balance amount that you will allow before the cost assignments are complete.

This diagram illustrates the reciprocal assignments process: