How Allocable Works

Allocable stems from the Latin word allocatus, which translates to "place." If something of value—be it money or products—is capable of being distributed to an intended receiver within a given timeframe, then it has become allocable.

We most often use "allocate" concerning the balancing of a business's expenses. In the case of taxes, business owners must designate a portion of their income as either allocated or apportioned revenue. Allocated revenue is the more difficult of the two as it involves the revenue of every specific department in a company.

Another instance in which allocable is used involves depreciation. If a business has invested a significant amount of funds into an expensive (or 'capital') asset they predict will depreciate in value over time, it is crucial to know what percentage of that investment is allocable to what returns over the asset's useful life. Moreover, a sizable business with many departments, services, and branches has allocable income because it is generating various amounts of money from a variety of streams. If a business of this size wanted to justify the funding of a central headquarters instead of each stream managing itself, the business would need to allocate exactly how much revenue is coming from where to ensure overall profitability.

Allocable Real World Example

Just because an asset is allocable does not mean someone can easily allocate it. For instance, the rollout of the COVID-19 vaccine in early 2021 has been confronted with various distribution challenges throughout the world. On a global scale, the United States of America has heard a "huge demand" for excess vaccines from many countries. But, according to U.S. state department global COVID-19 response coordinator Gayle Smith (via Reuters), criteria for allocation remains under development. Noting the situation was exceptionally serious in India, Smith explained a build-up of international supply chains will help make America's excess vaccines even more allocable.

Ontario, Canada, meanwhile, shared their strategy for allocating the Pfizer and Moderna vaccines over the first several weeks in May of 2021. While they will allocate half of the province's doses to densely populated "hotspot" neighborhoods, they will allocate the others to a greater number of areas through smaller "pop-up clinics." Once they distribute the hotspot vaccines, the province will target late May for when the doses will become even more allocable.

Several factors have affected the CDC's allocation of vaccines. Blood clot concerns paused the vaccine's administration, making it less allocable during the middle of April 2021. Then in late April, roughly 60 million doses of the Johnson & Johnson vaccine sat on shelves as the FDA had yet to clear Johnson & Johnson's contracted manufacturer Emergent BioSolutions.

Allocable vs. Apportioned Revenue

Apportioned revenue is the default label for most businesses. It is taxable revenue determined after operating costs and equipment depreciation are subtracted.

A business determines its allocated revenue through a complex process. The business identifies the revenue generated from all of a company's departments according to current status, various challenges faced, and overall performance.