[fparry]

I have an accounting question.- Corporate Allocation - As the company grows what is an acceptable percentage of net income I should try and hold to for our corporate allocation.

[yellowlooker]

My corporation holds the percentage of total revenue each center generates in relation to the total revenue for the company. Then uses this percentage to generate a monthly corporate allocation. For example if center B, generated 10% of the total revenue for the company, then center B is responsible for 10% of the corporate allocation. The Corporate allocation is the sum of the salaries of the corporate executives plus any items that are dedicated to the corporation like software, hardware, etc...

[guspwa]

Corporate allocation shouldn't be allocated by the sales; the reason is that the allocation is the expense occurred in the corporate; the allocation must allocated to each business unit(BU) by the service, which the corporate have contributed to each specific BU. Why it has to be this way? Because BU is not a just order taken from corporate. Most of BU are responsible to their own operation result, which is not the corporate can really do much service to each BU. However, this creates somehow difficulties to the allocation fairness (definitely, it is not talking about equalization here). Therefore, many corporates have developed the fixed and variable allocation. Fixed variable allocation will be allocated to all BU equally when variable allocation will be computed by the time devoted to those specific BU work.