Cost allocations provide a means of distributing costs or billing for goods or services across commonwealth agencies that use the SAP enterprise resource planning system. Cost allocations include a “sender” – the payee, or area seeking payment for a good or service provided – and a “receiver” – the payer, or area paying or reimbursing for a good or service.
Cost allocations are preferably and primarily processed in the controlling (CO) module of SAP, which uses a single secondary cost element that is uniquely configured to split the allocation as revenue for the sender and an expense for the receiver. Cost allocations can also be processed in the finance (FI) module of SAP using a standard general ledger account for revenue and expense.
To learn more about secondary cost elements and why they should be used for the majority of reimbursement billing activities, as well as other important details about cost allocations, please review our Cost Allocation FAQs.