Film Accounting Glossary
Allocation
What is an allocation?
An allocation is the split of a shared cost across the accounts, episodes, or productions that benefited from it.
A single insurance premium, a shared production office, or a picture-car hauler moving vehicles for two units all need allocating rather than dumping into one line. Incentive auditors scrutinize allocations closely, because an allocation that shifts cost into a qualifying category without a defensible basis will be disallowed.
Example
One $90,000 insurance premium covers two units shooting at once. Split by shooting days, 32 and 18, it lands $57,600 and $32,400. Split evenly at $45,000 each it overcharges the smaller unit, and an incentive auditor will ask why.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
Journal entries, plus a written allocation basis kept in the audit file. Scrutinized hardest wherever an allocation moves cost into a qualifying category.
Common mistake
Splitting a shared cost evenly because it is quicker. An even split that ignores actual usage overcharges the smaller consumer, and an auditor will ask for the basis.
Related questions
- How should a shared cost be split between two units?
- On a documented basis that reflects use, such as shooting days, headcount, or vehicle counts, applied consistently every week rather than chosen per invoice.
- Why do incentive auditors challenge allocations?
- Because an allocation is a judgment, and a judgment that happens to move cost into a qualifying category increases the credit. Auditors test the basis, not the arithmetic.