Distributed Costing with a Negative Result Distribution Group Member Example

When the distribution group member has a negative run result, the distribution amount inflates for some of the distribution group members to ensure the distributed element amount matches the run result.

For example, the distributed amount is 20 and there are 2 distribution group members with amounts 50 and -25. Then the distribution of distributed amount would be as follows:

Calculation Steps

1. Individual element within the distribution group is the numerator.

2. Sum of all the elements in the distribution group is the denominator.

3. Calculate distribution percentage by dividing denominator into the numerator.

4. Multiply distribution percentage by the adjusted amount.

   Element	Original Amount	Allocation Calculation	Adjusted Distribution Amount
   Earning 1	50	=(50/(50-25)*20)	40
   Earning 2	-25	=(-25/(50-25)*20)	-20
   Distribution Group Total	---	---	20

   The calculate payroll process distributes the cost results for the adjusted distributed element across the elements in the group. The distribution is based on the ratio that each element contributes to the group's total.

   As you can see, Earning 1 appears to be inflated but when it's offset by Earning 2, the sum of the Distribution Group is accurately adjusted and allocated. The payroll run result matches the Distribution Group amount.