Corporate costs allocation

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Corporate costs allocation Exercizes Corporate costs allocation •The problem: we have an organizational configuration made of several business units (or, in general, profit centers) and some centralized units (hp: cost centers, not profit centers) •This centralized staff units provide services to each business units, therefore their existence (and the costs produced) has to be addressed at the business units •It is possible to distinguish between two “macro-categories” of corporate units: Ø“shared services” Ø“corporate staff” Corporate costs allocation EXERCISE 1 «RAMOPRODUCTS» The questions •Which costs of the “centralized unit” maintenance are allocated to the various company BUs? •Which type are these costs? •What is the main problem we could face? The answers CROSS-SUBSIDIARITY: ALLOCATION OF NOT-USED CAP ACITY •Which costs of the “centralized unit” maintenance are allocated to the various company BUs? •Which type are these costs? •What is the main problem we could face? TOTAL ALLOCATION ACTUAL COSTS