Example: Variable Numerator Allocations

In this example, you allocate a year-to-date salary expense amount (12,000.00 USD) to several business units (ledger type BU 9 8100-8199). You want to base the allocation amount for each business unit on the number of people in the business unit compared with the total number of people in the department.

In this equation, the variable numerators are:

• BU 3: 500

• BU 4: 300

• BU 5: 200

In this equation, the common denominator is the total head count: 1,000.

Review the following calculations:

500/1000 = (.5 x 12,000) = 6,000

300/1000 = (.3 x 12,000) = 3,600

200/1000 = (.2 x 12,000) = 2,400

You apply the amounts to the General Account 7970. Apply 6,000 to account 3.7970. Apply 3,600 to account 4.7970. Apply 2,400 to account 5.7970.