Rule 1
It is not allowed to create a cost center for less than two employees
Rule 2
An employee is assigned to one cost center only
Rule 3
Threshold of minimum amount per year of primary expense.
Recommendation: minimize the number of CC allocation
- For Production costs: allocation between organizational CC and another organizational CC
- For non Production costs: allocation from organizational CC to reporting CC
Exception
- Utilities
- Insurance (IAS 19)
- R&I: allocation from CC to WBS
- Intercos: from organizational CC to organizational CC other company
General rule:
- All type of expenses - different than Manufacturing Costs (Indirect/Direct) and R&I - go directly to BFC (at different reporting cost center) and to only 1 BFC heading.
General rule:
- “No pricing” rule: allocations between organizational cost center, within the same legal entity (same GBU normally, but could be also between 2 GBUs) should be done at cost.
General rule:
- Payroll expenses shouldn’t be posted to technical cost center if HR/Payroll system is integrated.
- An employee is assigned to only one cost center
