I will show you how to allocate overhead expenses to cost centers based on the Sq. ft.,
Accounting department required to allocate the rent expense to the cost centers based on some criteria in the system and it should be auto-allocated every time when the expense invoice booked, accounted and post in GL.
For instance, if a company incurred rent expense USD 100,000 in the Dec-22 period and as per company procedures, this should be allocated to different departments on Sq. Ft basis
“A” represents total expense, in our case, it is USD 100,000, so we need to select 1021.62101.1999.00000.00000 and type should be “C” constant, currency type “Entered” and currency “USD”. All as C-C-C-C-C
“B” represents the usage factor of the departments. Here we need to make sure that we should select only parent value of the cost center, and type should be “L” looping, subsequently, the system will automatically pick the child values. This should be C-C-L-C-C
“C” represents the total area of the company, which is 20,000 Sq. ft. Here we need to make sure that we should select only parent value of the cost center, and type should be “S” summing, subsequently, the system will automatically add up the amount of each cost center. And here we have Again this is C-C-S-C-C
“T” represents the target account, which is a Debit account, and it will be the same account as we have given in “B”. This is C-C-L-C-C
“O” represents the offset account, which is a Credit account and it will be the same account as we have given in “A”. Everything the same as entered in “A” above and the same format C-C-C-C-C