Examples for Calculating Prorate Amounts using Allocation Basis Method
The following example illustrates how allocation generation calculates the basis percentages and prorate amounts using the basis methods:
-
Prorate
-
Target Percentage and Prorate
The two prorate basis methods provide precise control over how the rule distributes the source pool. The rule uses the basis attributes defined in the allocation rule to derive the rate at which the source pool amount is apportioned among the target projects and tasks
Prorate Basis Method
The Information Technology department captures its costs such as labor, supplies, and expenses in a shared service IT project. These costs are then allocated to projects that benefit from IT services based on the total labor hours charged to each project.
( target task basis amount / total basis amount ) * source pool amount = allocation amount
Using the Prorate basis method, for a source of $1000.00, consider the following target details:
( target task basis amount / total basis amount ) * 100 = basis percentage
The basis percentage for each target task is equal to the target task basis amount divided by the total basis amount, multiplied by 100. For example, in the following table, for task 1 on project ABC the application determines the allocation amount by multiplying the basis percentage for each target task by the source pool amount.
|
Project |
Task |
Labor Hours |
Basis Percentage |
Allocation Amount |
|---|---|---|---|---|
|
ABC |
1 |
10 |
10 |
100.00 |
|
ABC |
2 |
20 |
20 |
200.00 |
|
DEF |
1 |
30 |
30 |
300.00 |
|
DEF |
2 |
0 |
0 |
0.00 |
|
GHI |
1 |
40 |
40 |
400.00 |
For the Prorate basis method, the allocation rule prorates the amount specified by the source pool to the targets based on the basis attributes in the allocation rule.
Target Percentage and Prorate Basis Method
In this example, a subset of projects utilizes the IT services. The allocation rule is configured to allocate a fixed percentage of the source amount to each project and then it spreads across tasks based on the total actual labor hours charged to each task.
( target task basis amount / total target line basis amount ) * ( source pool amount * target line percentage ) = allocation amount
Using Target Percentage and Prorate basis method, for a source of $1000.00 allocated to the target line, consider the following details:
( target task basis amount / total target line basis amount ) * 100 = basis percentage
Basis percentage for each target task is equal to the target task basis amount divided by the total basis amount the target line from the allocation rule, multiplied by 100. For example, in the following tables, for task 1 on project ABC the application determines the allocation amount by multiplying the basis percentage for each target task by the source pool amount for the target line.
|
Line Number |
Project |
Target Percentage |
Allocation Source Pool Amount |
|---|---|---|---|
|
1 |
ABC |
50 |
500.00 |
|
2 |
DEF |
25 |
250.00 |
|
3 |
GHI |
25 |
250.00 |
|
Target Line Reference |
Project |
Task |
Basis Amount Labor Hours |
Basis Percentage |
Allocation Amount |
Effective Percentage |
|---|---|---|---|---|---|---|
|
1 |
ABC |
1 |
10 |
33.3 |
166.67 |
16.67 |
|
1 |
ABC |
2 |
20 |
66.7 |
333.33 |
33.33 |
|
2 |
DEF |
1 |
30 |
100 |
250.00 |
25 |
|
2 |
DEF |
2 |
0 |
0 |
0.00 |
0 |
|
3 |
GHI |
1 |
40 |
100 |
250.00 |
25 |
For the Target Percentage and Prorate basis method, the rule first uses the target percentage to calculate the amount to allocate to the line, and then apportions the results among all the tasks for that line. In the application, an effective percentage column is also available when reviewing the basis details for an allocation. The effective percentage represents the following:
-
percentage of the total source pool amount that the target task receives
-
consolidated percentage of the target percentage and basis percentage calculations.