IFO4
Loading...How shared costs are split: direct, proportional, or fixed.
Shared costs are the stress test of a cost allocation system. Ring 4 prescribes three methods: direct attribution where possible, proportional split based on consumption where direct attribution fails, and fixed allocation where consumption is unmeasurable.
A Ring 4 practitioner audits the choice of method for each shared cost line quarterly. The chosen method is written into the chargeback model and published to the teams whose budgets it affects.