(a) The following table lists some typical pools, together with illustrative allocation bases, which could be used in appropriate circumstances: ------------------------------------------------------------------------
Home office expense or function Illustrative allocation bases------------------------------------------------------------------------Centralized service functions:
1. Personnel administration........ 1. Number of personnel, labor
hours, payroll, number of
hires.
2. Data processing services........ 2. Machine time, number of
reports.
3. Centralized purchasing and 3. Number of purchase orders,
subcontracting. value of purchases, number of
items.
4. Centralized warehousing......... 4. Square footage, value of
material, volume.
5. Company aircraft service........ 5. Actual or standard rate per
hour, mile, passenger mile, or
similar unit.
6. Central telephone service....... 6. Usage costs, number of
instruments.------------------------------------------------------------------------
(b) The selection of a base for allocating centralized service functions shall be governed by the criteria established in 9904.403-50(b).
(c) The listed allocation bases in this section are illustrative. Other bases for allocation of home office expenses to segments may be used if they are substantially in accordance with the beneficial or casual relationships outlined in 9904.403-40. ------------------------------------------------------------------------
Home office expenses or function Illustrative allocation bases------------------------------------------------------------------------Staff management or specific
activities:
1. Personnel management............ 1. Number of personnel, labor
hours, payroll, number of
hires.
2. Manufacturing policies, (quality 2. Manufacturing cost input,
control, industrial engineering, manufacturing direct labor.
production, scheduling, tooling,
inspection and testing, etc.
3. Engineering policies............ 3. Total engineering costs,
engineering direct labor,
number of drawings.
4. Material/purchasing policies.... 4. Number of purchase orders,
value of purchases.
5. Marketing policies.............. 5. Sales, segment marketing
costs.Central payments or accruals:
1. Pension expenses................ 1. Payroll or other factor on
which total payment is based.
2. Group insurance expenses........ 2. Payroll or other factor on
which total payment is based.
3. State and local income taxes and 3. Any base or method which
franchise taxes. results in an allocation that
equals or approximates a
segment's proportionate share
of the tax imposed by the
jurisdiction in which the
segment does business, as
measured by the same factors
used to determine taxable
income for that jurisdiction.------------------------------------------------------------------------