Allocation run
Cost flow
GL departments, production departments after service allocation (reciprocal), activities, and where the cost lands. Red flows are unused capacity.
Conservation checks
| GL cost = production department cost after service allocation | 5,141,677.70 | 5,141,677.70 | OK |
| Department cost = activity cost | 5,141,677.70 | 5,141,677.70 | OK |
| Activity cost = allocated + unused capacity | 5,141,677.70 | 5,141,677.70 | OK |
| Product view: product-level + customer-level cost = allocated | 4,844,417.36 | 4,844,417.36 | OK |
| Customer view: customer cost + unattributed = allocated | 4,844,417.36 | 4,844,417.36 | OK |
| Operating profit = customer profit - unused - unattributed | 1,520,300.11 | 1,520,300.11 | OK |
Service department allocation: method comparison
| Production department | Reciprocal | Stepdown | Direct |
|---|---|---|---|
| Assembly & Finishing | 1,124,041 | 1,121,987 | 1,129,680 |
| Fabrication | 2,231,272 | 2,235,704 | 2,217,940 |
| Order Fulfilment | 1,786,365 | 1,783,986 | 1,794,058 |
| Total | 5,141,678 | 5,141,678 | 5,141,678 |
Reciprocal solves the simultaneous equations for services that serve each other; step-down allocates once in sequence; direct ignores service-to-service use.
Activity rates and capacity
| Activity | Department | Method | Driver | Cost | Volume | Rate / unit | Rate / min | Allocated | Unused capacity | Utilisation |
|---|---|---|---|---|---|---|---|---|---|---|
| Custom finishing | Assembly & Finishing | ABC | custom jobs | 224,808 | 1,041 | 215.95 | 224,808 | 0 | 100% | |
| Engineering changes | Assembly & Finishing | ABC | change orders | 337,212 | 229 | 1,472.54 | 337,212 | 0 | 100% | |
| Hand assembly | Assembly & Finishing | ABC | assembly hours | 562,020 | 128,686 | 4.37 | 562,020 | 0 | 100% | |
| Machine run | Fabrication | ABC | machine hours | 892,509 | 47,923 | 18.62 | 892,509 | 0 | 100% | |
| Quality inspection | Fabrication | ABC | inspections | 557,818 | 2,247 | 248.25 | 557,818 | 0 | 100% | |
| Setups | Fabrication | ABC | setups | 780,945 | 801 | 974.96 | 780,945 | 0 | 100% | |
| Credit and collections | Order Fulfilment | TDABC | invoices | 89,318 | 4,480 | 13.56 | 1.51 | 60,741 | 28,577 | 68% |
| Customer support | Order Fulfilment | TDABC | support tickets | 357,273 | 3,243 | 74.91 | 4.16 | 242,948 | 114,325 | 68% |
| Delivery | Order Fulfilment | ABC | deliveries | 500,182 | 4,386 | 114.04 | 500,182 | 0 | 100% | |
| Order processing | Order Fulfilment | TDABC | orders | 357,273 | 4,596 | 52.86 | 4.40 | 242,932 | 114,341 | 68% |
| Pallet handling | Order Fulfilment | ABC | pallet moves | 357,273 | 14,910 | 23.96 | 357,273 | 0 | 100% | |
| Returns handling | Order Fulfilment | TDABC | returns | 125,046 | 282 | 301.52 | 8.61 | 85,028 | 40,017 | 68% |
| Total | 5,141,678 | 4,844,417 | 297,260 | |||||||