# Indirect Cost Allocation

### **Module Guide: Indirect Cost Allocation**

#### **Module Location**

#### PPIC > Indirect Cost Allocation

#### **Module Objective**

#### The **Indirect Cost Allocation** module is a **cost accounting** tool used to distribute or allocate indirect costs (overhead costs) to the **Cost of Goods Sold (COGS)** or to the value of inventory. This process is essential for ensuring that all costs related to production, beyond just direct material costs, are accurately expensed.

### **1. Main View (Allocation List)**

#### The main page of this module displays a list of all indirect cost allocation documents that have been created.

#### **View Explanation**

- #### **View**: This page is a history of all cost allocation processes. You can see the **Journal Code, Transaction Date, COGS Allocation** (amount allocated), and **Allocation Type**.
- #### **Action Buttons**:
    
    
    - #### **\[Allocate Cost\]**: The primary button to start a new indirect cost allocation process.

### **2. Steps to Perform Cost Allocation**

#### **Step 1: Create a New Allocation Document**

#### From the Main View, click the **\[Allocate Cost\]** button to open the **Add Allocation** form.

#### **Step 2: Select Transactions to be Allocated**

#### On the form that appears, the system will display a list of transactions from the general journal that are candidates for allocation (e.g., PACKAGING MATERIAL USAGE, BANK LOAN INTEREST).

#### **Step 3: Define Allocation Percentage and Amount (Important!)**

1. #### For each transaction line you want to allocate, enter the percentage or amount to be charged.
2. #### You can fill in the **Allocation Percentage** column or directly fill in the **Allocated Amount (IDR)**.
3. #### The system will calculate the **Fixed Amount (IDR)** based on the total transaction.

#### **Step 4: Confirm the Allocation**

#### After all percentages or allocation amounts are filled in, click the save/confirm button (not visible). This action will create a journal entry to move the cost from the overhead expense account to the COGS or WIP Inventory account.

### **Tips & Important Notes**

- #### This is an **advanced cost accounting process** that is typically performed at the **end of the month** as part of the book-closing process.
- #### Accurate overhead cost allocation is crucial for obtaining the true **Cost of Goods Sold (COGS)** and for valid profitability analysis.
- #### This module is a crucial work tool for the **Cost Accountant** and **Controller**.