Volume Driven Allocations

Overview


One way to allocate costs is to measure some activity (here we generically refer to it as a volume) and then assign a rate to the activity. The allocated cost is then the {% volume \times rate %}.

As an example, when allocating IT expense, a company could track where its IT staff spends its time (through a time logging system). That is, the number of IT hours used by each business unit is logged, and then the IT expense allocated to that unit is just the number of hours times the rate.

Sometimes the volumes are not as direct as the logging of hours. In such cases, it may be useful to find something that can be measured and can stand as a proxy for the cost being allocated.

Data


The following script shows an example of a set of volumes and assigned rates. 


var volumes = [
  { id: 1, accountid: 1, value: 10, type: 'account transaction' },
  { id: 2, accountid: 1, value: 10, type: 'account transaction' },
  { id: 3, customerid:1, value:1, type:'customer helpline' }
];

var rates = [
  { type: 'account transaction', rate: 2 },
  { type: 'customer helpline', rate: 20 },
]

Calculating Allocations


Once you have collected a set of volumes and rates, the calculation of rate times volume for each type of volume is straightforward. The following code uses the group module. 


let groups = $group(volumes, p=>p.type)();
let rateAllocations = [];
for(let rate of rates){
  let vols = groups[rate.type];
  let allocation = {
    type:rate.type,
    charge: $list(vols).map(p=>p.value*rate.rate).sum()
  };
  rateAllocations.push(allocation);
}
Try it!

Contents