Session 4: expenditure allocation Back

This example uses the MyBakery data which is provided with the software. If you have not loaded the MyBakery data file, open the file before you continue.

The expenditure items entered for MyBakery can be seen across the top of the screen. The first item is Apples and Pears with an allocation amount of $52,004.00.

As the apples and pears are bought straight from an orchard this item has been matched to the ABS concordance table as fruit in the Sector Group: Agriculture.

Scroll down the Sector Group: Agriculture column until you locate the Fruit group. You will notice in the Apples and Pears column, the percentage allocated is 100%. This means the total amount of $52,004.00 has been allocated to this group.

Use the mouse to click in the cell showing 100% and change the value to 90%. The total allocation will change to $46,803.60 or 90% of $52,004.00. The column also changes colour, from green to red to indicate the expenditure item has not been fully allocated.

It is important you allocate all or 100% of the expenditure item to a group. However, sometimes you may want to deliberately over or under allocate. For example if you want to run a scenarios, such as “how would my TBL account change if I bought more or less milk?”

Next, move to the expenditure item Milk. To match this item with the ABS concordance table it is important you know the origin of the milk as it may belong to either Untreated milk or Treated milk group. For example fresh milk from the farm is allocated to Untreated Milk while milk from a retailer or processed milk is allocated to Treated Milk.

MyBakery uses both untreated and treated milk in its products so they both have to be matched to the ABS concordance table. Untreated Milk is in the Sector Group: Agriculture. Locate the Sector group: Agriculture in the column on the left and then Untreated Milk. You will see 10% of this expenditure item has been allocated to this group.

As the column is green indicating the item has been fully allocated, the remaining allocation must be matched to Treated Milk which is in the Sector Group: Food. Scroll down the Sector Group column until you locate Food and then Treated Milk. You will see the remainder or 90% of this expenditure item has been allocated to this group.

Why is the distinction important?
If you have chosen to report on the indicator water use, one dollar of treated milk equates to about half a litre to one litre of milk, which may require xx litres of water to be produced. However one dollar of untreated milk is much more milk, because untreated milk bought (usually in bulk) from the farm is much cheaper. So, one dollar of untreated milk requires yy litres of water to be produced.

The next expenditure item is Chicken. The chickens used in MyBakery are bought slaughtered so 100% of this expenditure item has been allocated to the Food: Poultry, slaughtered product group. There is another group, Agricultural: Poultry which refers to live chickens. This is another example where, when collecting data, you should be try to determine the correct source of the expenditure rather than make an assumption.

The next column is Oats and Wheat. This is another example (like milk) where accounts aggregate over a number of different purchases. The MyBakery accountant revealed that 10% of the $10,673 spent on Oats and wheat was for wheat and the rest for oats. As the column is green, 100% of this expenditure has been allocated with 10% Agriculture: Wheat and 90% to Agriculture: Oats, sorghum and other.

The opposite situation can happen where your accounts are more detailed than the ABS product groups. MyBakery buys corn and potatoes for their pies, both purchased directly from a farm. They both belong into ABS Agriculture: Vegetables group. Scroll across the expenditure items until you can see the corn and potato items. You will see 100% has been allocated for both items and to the same ABS group. The account items have not been over-allocated because 100% of the corn and 100% of the potatoes has been allocated.

When allocating the expenditure items, it may be helpful to refer to the list of ABS Account descriptors to assist in determining the appropriate sector and product group.

      Access the ABS Account descriptors list

You can continue to browse through the expenditure allocation for MyBakery, looking at the expenditure allocations and making some assumptions of your own regarding the reasons for the allocation groupings.

Next: Revenue allocation