Create an Allocation Rule and Generate Allocations

This example distributes a cost that's recorded in one account to different cost centers, based on the headcount in each cost center.

The headcount is recorded using the statistical currency, and the cost centers receiving the cost are in a parent cost center. The chart of account consists of the following segments:

• Company

• Line of Business

• Account

• Cost Center

• Product

• Intercompany

Create the Rule

Navigate to the Calculation Manager, which is the tool for managing allocations.

1. Navigate to the Journals work area.

2. Click the Tasks icon and select the Create Allocation Rules task. The task opens the Enterprise Performance Management workspace.

3. From the Navigate menu, select Administer, Calculation Manager.

4. Expand the Essbase application.

5. Find the balances cube for the chart of accounts that's associated with the relevant ledger and expand it.

6. Right-click the Rules node and select New from the menu. The New Rule window opens.

   Tip: Since the rule is going to allocate cost based on headcount, consider including headcount in the rule name.

7. Accept the default values for the rest of the fields and click OK. The New Rule window closes and the Rule Designer opens in a new tab with the name of the rule you just entered.

Define the Point of View

Set the Point of View to default values that are fixed throughout the allocation rule. For example, if a chart of accounts has a future-use segment that's currently not used, you can use the Point of View to set a default value such as 000. Then you don't have to select a value for this segment when defining the rule.

1. In the Rule Palette, select the Point of View object and place it between the beginning and ending components in the flow chart on the Designer area.

2. To have users supply the accounting period when the allocation is run, use a variable. Runtime prompt variables make rules dynamic and reusable. Click in the Value field for the Accounting Period row.

3. Click the Actions icon and select Variable. The Select Variable window opens.

4. Select the Database category, which is the category for the specific cube. The Application category applies to all cubes.

5. In this example, the accounting period is already defined as a variable, so select it and click OK.

6. Click the Member Selector button. The Member Selector window opens. You can set the fixed dimensions namely, Ledger, Company, Line of Business, Product, and Intercompany segments from the Member Selector. You can also set the Currency and Currency type. You can expand the dimensions to find the values or you can search for them. Alternatively, instead of using the Member Selector, you can enter the values manually.

7. Select Ledger from the Dimensions drop-down value.

8. Expand All Ledgers.

9. Select the appropriate ledger.

10. Click the Select icon to move the ledger to the Selections panel.

11. From the Dimensions list, select the Company, the Line of Business, the Product, the Intercompany, and the Currency dimensions, and set them.

12. Select Currency Type from the Dimensions list.

13. Expand the Currency Type node and select Total. This selection indicates that the allocation is going to use balances in the ledger currency, including the equivalent ledger currency balances of foreign currency journals.

    Note: If you select Entered, the allocation would only use amounts where the entered currency is the currency that was selected for the Currency dimension.

14. Click OK. The Member Selector window closes.

Fixed values have now been set for all of the segments, except the Account and Cost Center segments.

Define the Allocation Component

1. From the Rule Palette, select the Allocation object and place it between the point of view member components in the flow chart on the Designer Area. The Allocate Wizard window opens and the Point of View tab opens.

   This Point of View is specific to the Allocation component, so if you have a rule with multiple Allocation components, you can specify a Point of View for each of them. Since this rule has only one Allocation component, and you have already defined a Point of View, skip this step.

2. Click Next. The Source tab opens.

   The source is the revenue pool to be distributed or allocated. A source can be a referenced account balance or a user-defined amount. For this rule, the source is the communication cost. To retrieve the cost, you must provide the account combination. You already specified values for the Company, Line of Business, Product, and Intercompany segments in the Point of View, so the only source segments to specify here are Account and Cost Center.

3. Click the Member Selector button. The Member Selector window opens.

   1. On the Dimensions list, select Account.

   2. Click the Search tab and search for the communications cost account.

   3. Select the account and click the Select icon to move the account to the Selections section.

   4. On the Dimensions list, select Cost Center.

   5. Click the Search tab and search for the cost center.

   6. Select the cost center and click the Select icon to move the cost center to the Selections section.

   7. Click OK. The Member Selector window closes.

4. The remaining dimensions, Scenario, Balance Amount, and Amount Type, specify what balance to retrieve from the source account. On the Allocate Wizard window, the default value for the Scenario dimension is Total for Allocations, which is the sum of the actual and allocated amounts. Since the source for this rule only involves actual balances, you must change the value. Click the Member Selector button. The Member Selector window opens.

   1. On the Dimensions list, select Scenario.

   2. Expand Scenario in the Members tab.

   3. Select Actual and click the Select button to move it to the Selections section.

      Note: If you have two rules with the second rule using the allocations resulting from the first rule, use the Allocated scenario for the second rule.

   4. On the Dimensions list, select Balance Amount.

   5. Expand Balance Amount in the Members tab.

   6. Since the rule is going to allocate communications cost for the period, select Period Activity. Click the Select icon to move it to the Selections section.

   7. Click OK. The Member Selector window closes.

5. Accept the default value for the Amount Type dimension as Period to Date.

6. Click Next. The Allocation Range tab opens. The range is the spread of values that the source is distributed against. In this rule, the cost is allocated across cost centers.

7. Click in the Select Value field in the Cost Center row.

8. Click the Actions icon and select Member. The Select Member window opens.

   1. Select the appropriate parent value and click the Select icon to move it to the Selections section.

      Note: Always select a parent value because you have to allocate across a range of values.

   2. Click OK. The Member Selector window closes.

9. Click Next. The Target tab opens.

10. The target receives the allocated amount. Enter the account number within quotation marks in the Account row.

11. Click Next. The Offset tab opens.

    The offset receives the offsetting debit or credit to balance the allocation that was generated. On the Offset tab, enter the account number in the Account row and the cost center in the Cost Center row, within quotation marks.

    Caution: The offset must be a child value. If you select a parent value, the allocation rule fails validation.

12. Click Next. The Exclude tab opens.

    Note: Use the Exclude tab for partial allocations. Specifically where you want to allocate a percentage of the total source and the percentage itself can't be entered. Instead, the percentage has to be calculated based on all the members in the basis and then some members have to be excluded from the allocation target range.For example, a basis contains cost centers 100, 200, 300, and 400. You want to distribute the source evenly across each cost center, so each cost center should be allocated 25% of the source. But you have to exclude cost center 300 from the allocation range. In this example, you would specify cost center 300 in the Exclude tab. When the allocations are generated, 75% of the source is allocated, 25% each to cost centers 100, 200, and 400. The 25% for cost center 300 remains unallocated because cost center 300 is excluded.

13. This particular allocation isn't excluding any values, so click Next. The Basis tab opens.

14. On the Basis tab, for the Account dimension, enter the account number that has the headcount values.

    Note: The basis determines the ratio in which the source must be allocated to each member of the allocation range. The basis could be distributing the source evenly. Or you can select specific statistical or account balances for a particular period as the basis.

    For this allocation, the ratio is going to be calculated by dividing a cost center's headcount by the total headcount.

15. Enter Period Activity in quotation marks for the Balance Account dimension because the total headcount for each cost center is included in one journal recorded in one period.

16. Enter STAT in quotation marks in the Currency dimension. The values for the other dimensions are derived automatically based on the Point of View and range specified previously.

17. Click Next. The Basis-Options tab opens.

18. Accept the default settings and click Next. The Rounding tab opens.

19. Specify the rounding options in case of rounding differences when the allocation is generated. Since the allocation is in US dollars, on the Rounding tab, enter 2 as the number of decimal places to use. Click Finish. The Allocate Wizard window closes.

Validate the Rule

Validation is an important and required step. Validation checks for consistency against the outline of the balances cube that it references. For example, validation checks that the offset is a child, not a parent value, and checks that entered values exist.

1. Click the Validate icon on the toolbar. After the validation is completed, a message appears stating whether the validation was successful.

2. Click OK.

3. Click the Validate and Deploy icon to deploy the rule and make it available for generation in the general ledger.

4. Click Yes to first save the rule.

5. After the deployment is completed, a message appears stating whether the deployment was successful.

6. Click OK.

Generate the Allocation Journal

Generate the allocation journal using the following steps:

1. Navigate to the Journals work area.

2. Click the Tasks icon.

3. Select the Generate General Ledger Allocations task.

4. In the Rule or Rule Set field, enter the name of the allocation rule. The Accounting Period prompt should appear.

5. Select the accounting period.

6. The Post Allocations option is selected by default.

7. Click Submit. A confirmation message appears stating that the process was submitted.

8. Click OK.

Review the Journal

1. Navigate to the Journals work area

2. Click the Tasks icon.

3. Select the Manage Journals task.

4. Enter the first part of the allocation rule name in the Journal field.

5. Enter a value in the Accounting Period field.

6. Select Allocations in the Source field.

7. Click Search.

8. Click the Journal link to open the journal. The cost that was allocated has a credit and the debits to the different cost centers are based on their headcount.

Now that the rule is defined, all that's needed for future accounting periods is to generate the journals.