Understanding Multitiered Allocations
All allocations can create multiple tiers of allocations if you define the calculation sequence. Multiple tiers are also known as compound or cascading allocations. Subsequent calculations use the allocation amounts from previous tiers. You can have up to nine tiers.
This multitiered allocation sequence is necessary when both of these conditions exist:
All of the corporate costs are passed through the warehouses to the business units.
Warehouse costs (not just corporate costs) are allocated to the business units.
The system can perform calculations sequentially only if all of the calculations in the sequence use the same type of allocation. For example, if you use an indexed allocation and a variable numerator allocation, the system cannot perform calculations sequentially. If you want to use different types for sequential calculations, you must compute each calculation separately and in the correct sequence. You must also post each calculation separately prior to computing the next sequential allocation.