Explain about distribution cycle and assessment cycle

Question

Accepted Answer

Distribution cycle is used to allocate primary costs to cost centers while assessment cycle is used to allocate secondary costs.

Distribution cycle is used to allocate primary costs to cost centers based on the cost element category.
Assessment cycle is used to allocate secondary costs from one cost center to another based on the sender and receiver cost centers.
Distribution cycle is executed before the assessment cycle.
Distribution cycle can be used for both direct and indirect costs while assessment cycle is used only for indirect costs.
Example: In a manufacturing company, the cost of raw materials is allocated to the production cost center using distribution cycle while the cost of maintenance is allocated from the maintenance cost center to the production cost center using assessment cycle.

Accepted Answer

If the same cost element being distributed with the same cost centers every month with the same basis then a distribution cycle can be created and used every month to reallocate the costs. And assessment cycle can be created and used to generate certain cost center reports without impacting the existing reports by creating and using the secondary cost element in the assessment cycle I hope this this might be helpful for your interview

Explain about distribution cycle and assessment cycle

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