Fast Formula Type to be use for Individual Compensation

Hi experts,

We are currently planning to implement a Language Allowance using Individual Compensation.

Based on the requirement, the allowance amount should be automatically calculated based on the employee’s salary. My understanding is that this can potentially be achieved through a Fast Formula. However, I would appreciate your guidance on the following:

What Fast Formula type would be appropriate for this requirement?
How should the Fast Formula be associated with the allowance calculation?
Would the Fast Formula need to be attached to the element configuration, the Individual Compensation Plan, or somewhere else within the setup?

Any advice, recommendations, or examples would be greatly appreciated.