Profit Center Report

[former_member197621]

Dear all

In Profit center report have 3 fields, Profit Center,Direct allocation and Indirect allocation, here i want to know is in which situation company want to give Direct allocation and in which situation company want to give Indirect allocation please give me one example for understand this.

By

Prasanna.s

[Former Member · Accepted solution]

Hi Prasanna,

Direct Allocation is used for all expenses which can be allocated directly to a profit center - Eg: If there are two branches of the company sharing the same office, the staff Salary can be directly allocated.

However the MD salary, Rental etc needs to be distributed across the 2 branches so that the Branch P&L report is logical.

Hence in the above scenario, such common expenses can be captured against a common cost center and distributed across the two branches using the distribution rule. This is the case of Indirect Allocation.

Hope the explanation helps.

Regards,

Hamsa

[former_member197621 · Accepted solution]

Hai Hamsa,,

I Understood well thanks for your replay

[Former Member]

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