Cost Center Allocation
You can automatically allocate General Ledger (GL) entries posted against a main cost centre to numerous child cost centres based on predetermined percentages by using a Cost Centre Allocation.
This is particularly helpful for growing businesses with multiple business divisions that share costs or profits. With the aid of the Cost Centre Allocation, ERPNext distributes entries at the transaction level automatically as opposed to manually.
Example:
- Based on allocation rules, rent booked against the Head Office cost centre can be automatically split into Sales, Support, and R&D cost centres.
How It Works
Establish allocation guidelines between a child cost centre and a main cost centre.
Post a transaction against the main cost centre (such as a sales invoice, purchase invoice, or journal entry).
Based on the allocation percentages, ERPNext automatically generates GL Entries for every child cost centre.
1. Creating a Cost Center Allocation
Go to: Accounts > Budgeting and Cost Centres > Cost Centre Allocation
Click New.
Enter the following information:
Main Cost Centre: The cost centre utilized in transactions.
Valid From: Date from which the allocation applies.
In the Child Table, provide:
Child Cost Centres
Percentage Allocation for each.
Check that the sum percentage is 100%.
Save and Submit the document.
2. GL Entries Against Transactions
After a Cost Center Allocation is activated:
Any transaction posted against the main cost centre will be automatically allocated into multiple GL Entries.
The system uses the percentages specified in the allocation record.
Example:
If you post a Sales Invoice against the main cost centre, ERPNext will allocate the GL entry into the specified child cost centres.