Hello all,
I recently took part in a Cost Accounting webinar and am building a demo-case in one of our test environments to spread knowledge within the company.
In the Deep Dive webinar it was stated that the difference between Cost distribution vs Cost allocation policies is that Cost distribution only enables the use of primary cost elements and no reciprocal processing whereas Cost allocation enables also secondary cost elements and has reciprocal processing. I understand the part on the primary and secondary cost elements, but what is this reciprocal processing part? It was explained as follows: " In the reciprocal allocation method, the mutual services that auxiliary cost objects exchange are fully recognized. The system automatically determines the order to perform the allocations in and iterate over it". While I understand all the individual words of this sentence, the concept still escapes me.
Would someone be able to translate this into a practical example to help me understand the functionality? Your help is highly appreciated!
Kind regards,
Satu
