The Allocate Indirect Costs option is a tool that is used to apply indirect equipment costs to each piece of equipment. An indirect cost is an expense that would be difficult to attribute to just one piece of equipment such as the cost of fuel. The allocation to each piece of equipment can be based on the percentage of rental expense for the period or on the equipment rental income for the period. The indirect equipment accounts are defined in the Chart of Accounts.
| 1. | To begin, enter the starting and ending dates for the period for which you want to create the allocation and then click on the Calculate Equipment Costs button. AccuBuild will display a summary of the amounts that have been posted to the equipment cost accounts, both direct and indirect, for the given period. Only those amounts that have been posted to an indirect account without an equipment number will appear in the Amt to Allocate field. The system will also display a recap of the total rental expense for each piece of equipment for the same period. The rental amount is then calculated as a percentage of the total rental expense and this is the percentage that is used to allocate the indirect costs to each piece of equipment. |
Note: The equipment numbers that are displayed are only those that have been set up to accept the allocation of indirect costs; this is controlled through the equipment category codes.
| 2. | The allocation amounts may be printed out through the Print Worksheet button. The Equipment Cost Allocation Variance Worksheet prints the direct and indirect equipment cost accounts in separate groups and shows which indirect accounts will be used in the allocation for the period. The report compares the total cost on the account found in the general ledger to the total cost on the account found in the equipment module; the variance between the two amounts is the amount that needs to be allocated to the equipment module. |
Note: This report will also group separately any cost that has been coded to an account with an equipment code where the account has not been designated as an equipment cost code.
| 3. | An equipment journal entry can be created automatically based on the worksheet information by clicking on the button found at the bottom of the screen. Simply print a copy of the journal and post it through the system. |
