What can be a consequence of using higher-level members in allocation rules?

Using higher-level members in allocation rules often leads to a decrease in the accuracy of the allocation process. Higher-level members generally represent broader categories that aggregate data, which can result in a loss of granularity. This means that specific nuances or variances in lower-level data can get overlooked, leading to allocations that do not accurately reflect the underlying activities or costs associated with more detailed data.

For instance, if allocation rules are applied at a departmental level instead of a functional or project level, the distribution of costs might not reflect the actual usage or benefits derived from those costs. Thus, while aggregating data can simplify processes and improve performance in terms of computational speed, achieving precise or meaningful allocations typically requires assessment at a more detailed level.

In contrast, using higher-level members might simplify the allocation process and could potentially lead to faster application runs, but these benefits come at the cost of accuracy in how resources or expenses are apportioned across different entities or functions.