Cost allocation method and system

A method of allocating costs within an enterprise, said enterprise comprising at least one cost centre and a plurality of measured objects (MO's), at least one of said MO's being associated with each said cost centre, and at least some of said MO's being dependent for their functioning upon one another;

• wherein said method comprises the following steps:
• (i) setting a first MO as a base MO and quantifying its total volume (“base MO volume”) based on a specified cost driver;
• (ii) identifying further MO's within the enterprise which contribute to the functioning of said base MO and, for each said further MO, quantifying the volume (“volume of further MO”) in which each is required for said functioning of the base MO;
• (iii) assigning a value of 1 (one) to the direct-cost of the base MO, thereby defining a unitary MO direct-cost [e.g. Table 3;
• Block A];
• (iv) assigning a value of 0 (zero) to the direct-costs of each of said further MO's [e.g. Table 3;
• Block A];
• (v) defining a set of simultaneous linear equations comprising:
• a first linear equation defined so as to equate said base MO volume to said unitary MO direct-cost set to 1 plus the volumes of said further MO's [e.g. Table 3;
• Block B);
• and
• an additional linear equation for each of said further MO's, each such equation being defined so as to equate the total volume of each respective MO to its zeroed direct-cost plus the volumes of the further MO's which contribute to its functioning [e.g. Table 3;
• Block B);
• and
• (vi) solving said set of equations thereby to generate a set of values (“iterative rates”) corresponding to the base MO and further MO's [e.g. Table 3;
• Block C].