what's the difference between expense allocation and cost allocation?

Hailey Jang
Tera Contributor

what's the difference between expense allocation and cost allocation?

1 REPLY 1

Amit Gujarathi
Giga Sage
Giga Sage

Hi @Hailey Jang ,

 

I trust you are doing great.

In ServiceNow, expense allocation and cost allocation are two different methods of distributing costs within an organization.

Expense allocation is the process of allocating expenses to different departments, projects, or cost centers within an organization. This is typically done for accounting and budgeting purposes. Expenses can be allocated based on various factors such as the percentage of the budget, the number of employees, or the square footage of a department.

On the other hand, cost allocation is the process of distributing the cost of a shared resource or service across multiple departments or cost centers. This is typically done to ensure that each department is charged only for the resources they use. Cost allocation can be based on various factors such as the number of users, the amount of data processed, or the number of hours used.

In summary, while expense allocation focuses on allocating expenses across different departments, cost allocation focuses on allocating the cost of shared resources or services across different departments.

 

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Regards,

Amit Gujarathi


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Amit Gujrathi