Managing manual overhead allocation bases

Applies to: 1C:Drive 1.6.2
Related modules: Production
Created on: April 22, 2025

Objective

1C:Drive version 1.6.2 introduces a new method for allocating indirect production costs between manufactured products. Previously, 1C:Drive only offered two options to allocate indirect costs: in proportion to cost or to quantity of components consumed to manufacture each product. Now, you can specify exactly how each indirect cost will be allocated.

After completing this tutorial, you will:

Learn how to create and manage custom cost allocation bases.

Prerequisites

To complete this tutorial, it is recommended that you:

Have a basic understanding of production cost calculation principles, direct and indirect costs, and cost allocation.

It is also recommended that you complete the tutorial using the latest 1C:Drive demo infobase. It already contains many data items you might need for this and other tutorials—such as counterparties, products, or operations. You are free to use any other infobase, but in that case you will have to create these data items on your own.

Case description

Best Furniture is a company specializing in home and office furniture manufacturing for customers worldwide. Among others, they produce kitchen tables of different sizes. Monthly, the company pays rent for its production facilities and also pays the electricity bills.

Consider a case where Best Furniture produces 300 small tables, 150 medium tables, and 100 large tables in a month. The company pays monthly rent and electricity bills.

Let’s see how we can allocate these indirect costs to the manufactured tables in a custom proportion: 4 (Large tables) : 2 (Medium tables) : 1 (Small tables). Moreover, we want to allocate Rent in exactly this proportion, while Electricity allocation should further be adjusted by how many tables of each size were manufactured.

Key steps

During the tutorial, you will go through the following steps:

Set up 1C:Drive
Fill initial data
Register production
Create cost allocation base
Allocate costs
View reports

Set up 1C:Drive

Let's start with making several changes to 1C:Drive default settings. These changes are needed to complete the tutorial.

Enable multi-business accounting.
This allows you to create additional businesses. You need it to register Best Furniture.
To do this, go to Settings; under Accounting settings, click Company; and under Multiple companies, select the Manage multiple companies checkbox.
This step is optional. You can skip it and complete the tutorial using the default company if you want.
Enable Production subsystem.
You need to enable Production subsystem to register any production-related documents.
To do this, go to Settings; under Accounting settings, click Production; and select the Enable production subsystem checkbox.
Enable Template based accounting.
To do this, go to Settings; under Accounting settings, click Company; and under Accounting, select the Use template based types of accounting option.

Fill initial data

To be able to follow this tutorial, you will need to create the following data items:

Company.
Accounting policy for the company.
Products and services.
Bills of materials.
Expense items.

Let’s see how to fill in this data.

Create a company named Best Furniture.
This step is optional. You can skip it and complete the tutorial using the default company if you want.
Create accounting policy for your company:
- Specify Effective date that precedes any of the documents you will create during this tutorial (01.01.2000 is a safe choice).
- On the Production tab, set Manufacturing overheads calculation method to Actual costing.

Create products and services for the tutorial:

#	Description	Product type	Base unit	Product category	Variants	Batches	Serial numbers
1	Small table	Inventory	pcs	Main category	FALSE	FALSE	FALSE
2	Medium table	Inventory	pcs	Main category	FALSE	FALSE	FALSE
3	Large table	Inventory	pcs	Main category	FALSE	FALSE	FALSE
4	Table materials	Inventory	pcs	Main category	FALSE	FALSE	FALSE
5	Electricity	Service	pcs	Main category	FALSE	n/a	n/a
6	Rent	Service	pcs	Main category	FALSE	n/a	n/a

Create a bill of materials for each product.
The table below is provided as guidelines. You may follow it or fill the BOMs in any other was you prefer.

#	Description	Process type	Finished product	Quantity	Operation (Routing tab)	Component (Components tab)	Quantity (Components tab)
1	Small table BOM	Production	Small table	1	Fast assembly	Table materials	1
2	Medium table BOM	Production	Medium table	1	Fast assembly	Table materials	2
3	Large table BOM	Production	Large table	1	Fast assembly	Table materials	3

And finally, create the most important objects in this tutorial—expense items that we want to allocate in a custom way.
To do this, go to Company; under Enterprise, click Income and expense items; and then click Create.
Note that Allocation method for both expense items is set to “Allocate by custom cost allocation base”.

#	Description	Item accounting category	Income and expense type	Allocation method
1	Electricity	Indirect product cost	Manufacturing overheads	Allocate by custom cost allocation base
2	Rent	Indirect product cost	Other expenses	Allocate by custom cost allocation base

Register production

Now that all data is in place, let's register the entire chain of 1C:Drive documents describing the table production process.

Before Best Furniture can start manufacturing kitchen tables, its warehouses must be fully stocked with components. You also need to register monthly expenses for electricity and rent.
In a real-life situation, these costs are probably spread across several invoices, but for the convenience, let us register them all in a single Supplier invoice with a single component and two indirect expenses:
Once the components are in stock and indirect production costs are registered, Best furniture can start working on these tables.
First, create a Production order that registers the intention to manufacture the tables. Fill the order as on the screenshot below:
The first step of Production process is consuming the components.
To register this fact, generate Work-in-progress (WIP) documents from the production order.
Each kind of table requires a separate WIP, so expect three of them.
Make sure each WIP is filled as on the screenshot below, and then set its status to Completed.
The next step is manufacturing the tables from the components consumed earlier.
To register this fact, generate a Production document from each WIP.
No changes are required for Production documents, so just click Post and close for each of them.

Create cost allocation base

Now production is completed, but before you can allocate the indirect costs between the manufactured tables, you need to define in which proportion they should be allocated.

To do this, create a Custom cost allocation base.

Go to Production > Custom cost allocation bases and click Create.
As you can see, the document has two tabs: the first one contains a list of expense items to allocate, and the other a list of products between which the expense items will be allocated.
First, enter general details as on screenshot below. Each cost allocation base is valid for one month only, so make sure to exactly specify the month in which the tables were manufactured.
On the Expense items tab, add expense items you want to allocate.
The quickest way to do it is to click Fill in. This will automatically add all expense items related to services that were purchased for this department during this month (Electricity and Rent, in our case).
However, you can add expense items manually if you want; just be careful to add only items that were actually purchased.
Note that Adjust by product quantities checkbox is selected for Electricity and cleared for Rent. In a minute you will see how this affects the cost allocation.
Now, go to the Cost allocation base tab. When you have just created the document, this tab was empty; now it shows a column for each expense item you specified on the previous tab.
You can add Small table, Medium table, and Large table manually if you want, but there is a better way—just click Fill in, and 1C:Drive will automatically find all products that were manufactured in the department during the month, and fill them in. Try it!
Once the product list is filled, it is time for the most important step: defining allocation proportions. Specify them as on the screenshot below.
This means that both Electricity and Rent costs will be allocated between the three kinds of tables in proportion 4:2:1, with Electricity additionally adjusted according to quantities of manufactured tables of each size.

Now all data is in place, so let’s proceed to the actual cost allocation stage.

Allocate costs

In 1C:Drive, indirect production costs are allocated during the month-end closing procedure, so you need to run this procedure now.

To do this, go to Company > Month-end closing, fill the fields as on the screenshot below, and then click Month-end closing.

Make sure you select the year and month during which the tables were actually manufactured.

View reports

Go to Production > Reports and generate the Cost of goods produced (actual costing) report. In the report settings, specify Best Furniture and select the period during which the tables were manufactured.

Now, pay attention to the Indirect cost column. First, let’s see how Rent is allocated:

36 000 Euro for Large tables, 18 000 Euro for Medium tables, and 9 000 Euro for Small tables. The proportion is 4:2:1, exactly as specified in the Custom cost allocation base.

Now, let’s check allocation of Electricity. Its proportion in the Custom cost allocation base is also 4:2:1, so it is reasonable to expect that the total 21 000 Euro will be allocated as 12 000 : 6 000 : 3 000.

Looks like the actual figures are quite different from that. Why? Electricity allocation, unlike Rent, is affected by the Adjust by product quantities checkbox. This means that the allocation proportion is, literally, adjusted by product quantities (100 large, 150 medium, and 300 small tables). It is not 4:2:1 any more, but (4 x 100) : (2 x 150) : (1 x 300), which equals to 400:300:300, or, simply put, 4:3:3.

That’s how the Adjust by product quantities checkbox works. It is useful for indirect costs that scale with production volume, like Electricity, because producing 100 tables consumes proportionally more electricity that producing 1 table. But this checkbox is not suitable for indirect costs that do not scale with production volume, like Rent.

This concludes the tutorial. Now you are familiar with the Custom cost allocation bases functionality of 1C:Drive. Thank you for your time!