# Cost allocation: how to move indirect costs to the cost price

URL: https://bimpsoft.com/en/help/costing/cost-allocation/
Updated: 2026-11-06

> The Cost allocation document moves accumulated indirect costs (workshop rent, electricity, foremen's pay) to the cost price of products, services provided or goods sold. Create it in "Warehouse → Cost allocation", fill in the "Products" and "Costs" tabs, click "Allocate" and choose the basis.

## What cost allocation is for

The Cost allocation document moves accumulated indirect costs to the cost price of specific goods, produced goods or services provided. Indirect (overhead) costs cannot be assigned to a unit of goods at the moment they arise: they relate to the work of the workshop or the company as a whole.

Examples of indirect costs: workshop rent and utilities, pay of the production manager and foremen, lubricants, cleaning supplies and work clothes, site security, waste removal.

**Example.** A company makes chairs and tables. In a month it paid 20,000 UAH for workshop rent and 5,000 UAH for electricity, 25,000 UAH in total. They need to be allocated between 100 chairs and 20 tables in proportion to output. After the Cost allocation is posted, Bimp adds a share of the costs to the cost price of each item.

## Before you start

Costs must be accumulated in the cost price: with "Other expenses" or "Goods receipt" documents that have the "To cost price" or "Management accounting" switch on — see [Cost accumulation](https://bimpsoft.com/en/help/costing/cost-accumulation/). Expense items are set up in the reference list — see [Income and expense items](https://bimpsoft.com/en/help/getting-started/income-and-expense-items/).

## How to create a Cost allocation document

1. Open **Warehouse → Cost allocation** and click **Create**.
2. In the "Main" block, fill in the fields:
   - "Creation date": the document date;
   - "Period": the period the costs are allocated for;
   - "Allocate to": what you allocate to: "Produced goods", "Services provided" or "Goods sold";
   - "Warehouse": the warehouse where the products are (needed for automatic filling);
   - "Author" and "Responsible": the employees who create and carry out the allocation.

![Cost allocation document: the "Main" block with the fields "Creation date", "Period" 01.03.2026–03.03.2026, "Allocate to" set to "Produced goods", "Warehouse"; on the right the tabs "Products", "Materials", "Costs" and the buttons "Product", "Fill", "Allocate"](https://bimpsoft.com/help/_img/723cadc9-1f67-4169-81f3-1eb1e8ae9413.webp)

## How to select the products to allocate to

On the "Products" tab, click **Fill**: Bimp loads goods or services according to the document settings; keep those that the costs should be assigned to. To add them manually, click **Product**.

## How to select the costs to allocate

1. Go to the "Costs" tab and click **Fill**: Bimp loads the unallocated costs assigned to the cost price. Keep the ones you need. The **Costs** button adds a cost manually.
2. If needed, on the "Materials" tab add the materials that must be allocated to the products.

You can allocate one service across several [goods receipts](https://bimpsoft.com/en/help/purchasing/goods-receipt/) or several services to one goods receipt.

## How to calculate and post the allocation

1. Go back to the "Products" tab and click **Allocate**.
2. Choose the allocation basis:
   - **By amount**: more expensive goods get a larger share of costs (suitable for logistics);
   - **By quantity**: costs are divided equally across each unit (suitable for packaging).
3. Bimp fills in the "Costs amount" column for each item.
4. Check that the allocated amount matches the amount on the "Costs" tab. The "Allocated" and "Accrued" values are shown at the bottom of the window.
5. Click **Save and close**.

> [!WARNING]
> If the allocated amount does not equal the amount of costs, Bimp will not post the document and shows an error.

![The "Costs" tab of the Cost allocation document for allocation to "Services provided": the row "Work in progress" 400,000 UAH for work order No. 1; at the bottom 400,000 UAH allocated and 400,000 UAH accrued](https://bimpsoft.com/help/_img/8d55df5f-e2bd-4e66-8bc1-15050c7390ac.webp)

## What happens after posting

After posting, the accumulated amounts move to the cost price of the selected products: Bimp writes them off from the accumulation accounts (for example, "Work in progress") to the cost price of produced goods, services provided or goods sold. The result is visible in the "Accumulated cost" and "Gross profit" reports — see [Accumulated cost](https://bimpsoft.com/en/help/reports/accumulated-cost-report/). For an example with service work, see [Service cost](https://bimpsoft.com/en/help/service/service-cost/).

## FAQ

**Which costs are considered indirect?**

Costs that cannot be assigned to a specific unit of goods right away: workshop rent, electricity, pay of the workshop's administrative staff, general-purpose consumables, security, waste removal.

**What is the difference between allocation "By amount" and "By quantity"?**

"By amount": more expensive goods get a larger share of costs (suitable for logistics). "By quantity": costs are divided equally across each unit (suitable for packaging).

**Why is the Cost allocation document not posted?**

The total amount allocated to products must match the amount of costs. If the amounts differ, Bimp shows an error on posting.

**Which costs appear on the "Costs" tab?**

The "Fill" button loads unallocated costs that are already assigned to the cost price (accumulated by documents with the "To cost price" switch or by a service receipt).