In the product
Cost allocation
Allocate shared costs on your own drivers, including multi-step allocations, with the basis stated so the result can be defended.
Cost allocation
Spreading a shared cost across the parts of a business that caused it, using a stated driver.
Head office, IT and group insurance are paid centrally and consumed everywhere. An allocation assigns them on a basis somebody can defend: headcount, floor area, revenue, transaction volume.
The number is only as good as the driver, and the argument is never about the arithmetic — it is about whether the driver is fair.
Also written: allocations, cost allocations.
Related terms: MIS, Chart of accounts, Financial close.
Written about
Cost allocation you can defend in a board meeting
Every allocation is an opinion. The ones that survive questioning have a basis fixed before the result, applied the same way every month.
Written about
Segment reporting and management MIS from the same numbers
The segment note reports what management reviews. If the MIS and the note are built separately they will disagree. How to keep one set of numbers.
Written about
One definition of EBITDA: making MIS and audited measures agree
Two EBITDA numbers in one company is a definition problem, not a systems problem. How to write one rule, keep the variants named, and hold the bridge.