Allocating costs between two business units

[goakenton]

Disclaimer: This should be really easy, I just can't seem to get my head around it. Maybe it's an off day.

I am the treasurer for a small non-profit organization that provides services at two locations. A subset of the organization's expenses should be allocated to both locations. I'd like to figure out a formula for determining the appropriate allocation ratio between each location.

The inputs I'd like to use are as follows:
- client population per campus. In our example, Location 1 has 196 people (81.1% of total), and Location 2 has 46 people (18.9% of total). This split is subject to an annual re-calculation.
- board-approved split. There are two classes of shared expenses. One class is shared at 75/25 for Location 1/2 and the other class is shared at 50/50 for Location 1/2. This split is subject to an annual review.

For expenses that are shared 50/50, I want to just allocate expenses between the locations using the "population" ratio. So, instead of each location being responsible for 50% of the expense, I would allocate 81.1% to Location 1 and 18.9% to Location 2.

But for expenses that are shared at a different ratio, what's the formula that will get me my numbers?

I appreciate any input.

 

[Ishuda]

Disclaimer: This should be really easy, I just can't seem to get my head around it. Maybe it's an off day.

I am the treasurer for a small non-profit organization that provides services at two locations. A subset of the organization's expenses should be allocated to both locations. I'd like to figure out a formula for determining the appropriate allocation ratio between each location.

The inputs I'd like to use are as follows:
- client population per campus. In our example, Location 1 has 196 people (81.1% of total), and Location 2 has 46 people (18.9% of total). This split is subject to an annual re-calculation.
- board-approved split. There are two classes of shared expenses. One class is shared at 75/25 for Location 1/2 and the other class is shared at 50/50 for Location 1/2. This split is subject to an annual review.

For expenses that are shared 50/50, I want to just allocate expenses between the locations using the "population" ratio. So, instead of each location being responsible for 50% of the expense, I would allocate 81.1% to Location 1 and 18.9% to Location 2.

But for expenses that are shared at a different ratio, what's the formula that will get me my numbers?

I appreciate any input.

What makes you think that actual expenses depend on the number of people. Seems to me that, if you are going to change ratios that the ratios should be based on those expenses to be shared unless you have a very good argument for splitting it based on population.

BTW: Putting a good argument together for something should always include formulating a good argument for not doing so and preparing rebuttals to those arguments.