blog posts System Government Costing's Monthly Facts and Reminders Oct 18, 2023 9:00 amAccounting and BudgetingEquipment ManagementFY 24Payments to the UniversityWhen expenditures benefit multiple lines of service, the line of service to which it belongs must be identified by the department.Program and activity codes are the easiest way for departments to identify which line of service to allocate expenditures. This makes the allocation process during rate calculations easier, as everything that is assigned to the code gets allocated to that specific line of service. However, what if one expenditure benefits multiple lines of service?If the department is using activity or program codes, they can use a generic code, such as activity code A00, to code those expenses benefiting multiple lines of service. If the expense benefits all the lines of service, the department can use a reasonable, justifiable, and documented method to determine percentages that can be used to allocate the expenses across all lines of service. Frequently used methods include usage by line of service, square footage, or staff time spent on activities. Please note that revenue is not an acceptable allocation method. The more difficult scenario arises when an expenditure benefits multiple lines of service but not all lines. In this case, the expenditure can still be coded to a specific activity or program code. However, when the department allocates these expenditures in their rate calculation, they will need to create additional percentages using their chosen allocation method that only relate to the lines of service that the specific expense benefits. After determining allocation percentages, populate the amounts to assign to each line of service by multiplying the total for that expenditure by the appropriate percentage. Pivot tables and Excel spreadsheets can be very useful when complex allocations need to be done. Make sure that all allocation methods are documented with supporting explanations. ContactIf you have questions about service center rates and how they are calculated, feel free to consult System Government Costing’s “Who to Ask” list to find an expert who can help.