This document discusses different types of allocations in Dynamics GP. It begins by explaining what allocations are and how they are used to distribute administrative costs across departments. It then covers the pros and cons of allocations, as well as examples of fixed and variable allocations. Fixed allocations distribute costs using predefined percentages, while variable allocations use unit accounts to distribute costs based on usage. The document provides steps for setting up both fixed and variable allocations.

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SPEND MORE TIME ANALYZING -
BEST USES FOR FINANCIAL ALLOCATION
Kathy Kim and Rick Zich

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 GPUG Member for 4 Years!
 Favorite benefit: webinars, lunch and learns, and forums
 Work and Fun : Beer and Motorcycles
 ERP:
– Major-Dynamics, SAP, Baan,
– Minor- Visual, Misys, pcMRP, Xtuple
 eCommerce:
– Coresense, Magento, Woocommerce, Volusion, Shopify, Pixafy, Others
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RICK ZICH
PRESIDENT, MR BEER

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 GPUG Member for 3 Years!
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 Work and Fun : Organ and Tissue Donation, RV Travel
 GP:
– GP Modules: G/L, A/P, A/R, Fixed Assets
– ISV- Collections Management, KwikTag
 Other:
– Integration Manager
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KATHY KIM
DIRECTOR OF FINANCE, DONOR NETWORK OF ARIZONA

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 What are Allocations
– What do they do
– Pros / Cons
 Variable Allocations
– Explanations / Examples
 Fixed Allocations
– Explanations / Examples
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COURSE PLAN

5. WHAT IS AN ALLOCATION

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 Why?
Many companies “departmentalize” their financial statements. By
that I mean, they have a Chart of Accounts with a segment for the
department so they can easily run Income Statements showing
profit and loss for each department. However, what happens when
the CEO wants to allocate those Administration Department costs
to the “revenue-producing” departments?
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WHAT IS ALLOCATION

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 It is an account
– What do they do
– Automatic
 History of allocations in GP
– Standard and advanced allocations
 Warnings
– Plan, plan, plan (buy in and align)
– Review
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WHAT IS ALLOCATION

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 Pros
– Simplifies as you will no longer need to code to departments
– Minimizes errors
– Easier to train
– Less data input
– Easy to setup and change
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PROS / CONS

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 Cons
– Can get out of control if not setup correctly
– Year over year analysis may be compromised
– They do not store history
– You cannot report on them
– Accidental deletion is possible
– Cannot see the original posting
• Use a clearing entry as well
• Do not offset the source account
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PROS / CONS

10. FIXED ALLOCATION

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 The easier of the two
 Least flexibility of the two
 Best starting point
 Excellent for:
– Overhead posting
– Maintenance / Utility cost posting
– Budgeted amounts known
– Direct / Indirect
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FIXED ALLOCATION

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 Setup
– Financial > Cards > Fixed Allocation
– Put in Allocation account #
– Enter description
– Add note to further explain
– Choose Posting accounts
– Enter Percentages for each
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FIXED ALLOCATION

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 Setup Result
– Segment 99 is allocation
– 100-68030-99 will always
be a zero balance acct.
– 400 segment is 50%
– 500 segment is 25%
– 600 segment is 25%
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FIXED ALLOCATION

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 GJ Entry Result
– Cannot view 100-68030-99
– 400 segment is 50%
– 500 segment is 25%
– 600 segment is 25%
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FIXED ALLOCATION

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 Use Case: Salary allocation with ADP payroll
– Fixed allocation versus allocating in ADP
– Fixed allocation is easier to change
– Fixed allocation loses the original entry detail
– ADP allocation – can also be difficult to trace detail
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FIXED ALLOCATION

16. VARIABLE ALLOCATIONS

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 Let’s talk about unit accounts
– What is a unit account?
– What does this have to do with variable allocations
 Many different areas
– Payroll: FTE unit accounts
– Cost per unit (donors, organs, etc.)
– Square Feet
– Reporting in addition to variable allocations
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VARIABLE ALLOCATION

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 What are Allocations
– What do they do
– Pros / Cons
 Variable Allocations
– Explanations / Examples
 Fixed Allocations
– Explanations / Examples
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VARIABLE ALLOCATION

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 Constantly changing %
 Costs per department are based on usage
 Other?
Solution: Use Unit accounts with variable allocations
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VARIABLE ALLOCATION

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 First step is to ensure that you are using Unit Accounts
 A variable allocation account (Financial>Cards>Variable
Allocation Account) is set up with distribution (posting) accounts
for each department.
 Each distribution account is linked to a breakdown account. In
this example, the breakdown account is the unit account for
square footage
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VARIABLE ALLOCATION EXAMPLE
At Mr Beer we send out millions of email messages a month. This comes from the
sales department and from the marketing department. An email has a cost
associated with it. We already enter the number of emails into our unit account
information for each department.

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 When a transaction is posted to the variable allocation account,
an amount is apportioned to the distribution accounts based on
balance in the breakdown account, or unit account.
 The expense amount is recorded to the variable allocation
account and the transaction is posted. When a transaction is
posted to any variable account, the system automatically
records the appropriate amounts to the distribution accounts.
No amount is actually posted to a variable allocation account.
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VARIABLE ALLOCATION EXAMPLE

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 Financial>Cards>Variable
Allocation Account
 Enter the period to base
the transaction on
 Enter Dist accounts and
associated breakdown
USING the unit accounts as
the Distribution accts.
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SETTING UP VARIABLE

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RESULTS

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RESULTS

25. ADVANCED USES

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 When?
– Monthly
– Weekly / daily
 Why
– Control the timing
– Minimal visibility for budget watching
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CLEARING ENTRY

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 How?
– Financial >Transactions > Clearing
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CLEARING ENTRY

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 Result
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CLEARING ENTRY

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 What?
– Negative department
– Different offset accounts
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NEGATIVE DEPARTMENT

30. QUESTIONS?
Contact: rickz@mrbeer.com or kathyk@dnaz.org