BURDEN RATES PROCESSING

The calculation of indirect rates, the allocation of service center costs, and the application of indirects to projects are all included in this discussion of burden rates processing. Each of these topics is discussed separately. The initial discussion focuses on the calculation of indirect rates and the subsequent application of those rates to projects. A discussion of service center allocations follows.

Calculation of Indirect Rates

To calculate indirect rates, complete the following steps:

1. You must set up a pool. This includes setting up cost account/organization combinations, base account/organization combinations, allocation account/organization combinations, and a credit account/organization combination, and ensuring that the Service Center check box on the main Manage Cost Pools screen is not selected (see "Pool Setup Tips" for more information).

2. You must post all journals that affect the account/organization combinations that were set up for the pool.

3. On the Manage Cost Pools screen or the Manage Pool Processing Sequence Numbers screen, set up a sequence number.

4. On the Compute/Print Pool Rates screen, select a pool for computation.

5. You must run the Build Rate Application Table screen. If there have been no modifications to the pool structure, the sequence number, or the status of the Apply Rates to Projects check box on the Manage Cost Pools screen, this step is not necessary.

After you have completed all of these steps, Costpoint has all of the information required to accurately compute indirect rates. The rate computation process is described as follows:

Rate Computation Process

(This example uses YTD application; PTD works the same way.)

The first pool number in the first sequence number in the allocation group specified is processed. If that pool is NOT a service center, the following calculation takes place.

1. Costpoint summarizes YTD posted amounts from the General Ledger (FS_SUM table) and the unposted amounts from the Allocation Journal (ALLOC_BASIS_JNL table) for all account/organization combinations that were set up on the Pool Cost subtask of the Manage Cost Pools screen. This is the YTD Pool Cost.

2. Costpoint summarizes YTD posted amounts from the General Ledger (FS_SUM table) and the unposted amounts from the Allocation Journal (ALLOC_BASIS_JNL table) for all account/organization combinations that were set up on the Pool Base subtask of the Manage Cost Pools screen as the Pool Base. This is the YTD Pool Base.

3. To obtain the YTD Rate, Costpoint divides the YTD Pool Cost by the YTD Pool Base.

4. Costpoint multiplies the YTD Rate by each separate base account/organization combination, giving the YTD Allocation Amount for that base account/organization combination. The Allocation Journal is updated with this amount for each allocation account/organization combination.

5. To calculate the Amount to Post, Costpoint summarizes the YTD posted amounts from the General Ledger (FS_SUM table) for each Allocation Account/Organization combination on the Allocation Journal. This is the Allocation Amount that was previously posted YTD.

6. To obtain the current posting amount, Costpoint subtracts the allocation amount previously posted YTD (calculated in Step 5) from the new YTD allocation amount (calculated in Step 4). The Allocation Journal is updated with this amount.

7. The process (Steps 1 through 4) is computed against current period costs/base to derive current period Rate and Allocation Amount.

8. Costpoint updates the Pool Rate Table with both the Current Period and YTD Rates.

9. Costpoint updates the Statement of Indirect (POOL_SIE_SUPPT table) with all appropriate amounts and rates.

Service Center Processing

If you initiate the rate computation process and the pool being processed is a service center, Costpoint checks the Service Center subtask of the Manage Cost Pools screen to see whether the Calculation of Base flag is Automatic or Manual. If it is Automatic, Costpoint uses Steps 1 through 4 of the Rate Computation Process to calculate the allocation amount. Then it checks the Service Center subtask again to see whether the Apply Allocation method is Current Period or YTD.

If you selected the YTD option, Costpoint subtracts all previous YTD postings to the General Ledger for the account/organization or account/organization/project combination on the Allocation Journal from the YTD allocation amount (calculated in Step 4 of the Rate Computation Process), giving the current posting amount. The Allocation Journal is updated with this amount.

If you selected the Current Period option, Costpoint subtracts previous current period postings to the General Ledger for the account/organization or account/organization/project combination on the Allocation Journal from the current period allocation amount, giving the current posting amount.

Finally, the Statement of Indirect (POOL_SIE_SUPPT table) is updated with all appropriate amounts.

The calculation for an Automatic service center is almost identical to the calculation of a non-service center pool, except that no rates are posted to the Rate table.

For a Manual service center, however, the calculation and posting of allocation amounts is very different. First, you must enter the base amount on the Manage Allocation Journals screen for each account/organization or project/account/organization to which you want to allocate. After the base amount is available, you can begin the computation process.

1. Costpoint checks the Service Center subtask of the Manage Cost Pools screen to see whether the service center uses a standard rate (the Apply Standard Cost Per Unit check box is selected). If it does, Costpoint multiplies the Standard Unit Rate from that screen by the units that were entered for each account/organization or project/account/organization combination on the Manage Allocation Journals screen to obtain the allocation amount. This allocation amount is either a current period or YTD allocation amount, depending on whether the units were entered in the Current or YTD columns on the Manage Allocation Journals screen.

2. If the Service Center does not use a standard rate, Costpoint uses the following process to derive the allocation amount:

3. Costpoint checks the Service Center subtask of the Manage Cost Pools screen to see whether the Apply Allocation method is Current Period or YTD.

4. Depending on the method found in the previous step, either the current period or the YTD posted amounts from the General Ledger (FS_SUM table) and the unposted amounts from the Allocation Journal (ALLOC_BASIS_JNL table) are summarized for all account/organization combinations that were set up on the Pool Cost subtask of the Manage Cost Pools screen. This is the Pool Cost.

5. The units that were entered in the Allocation Journal are summarized across all account/organization or project/account/organization combinations entered. This is either a current period or YTD pool base, depending on whether the units were entered in the Current or YTD columns on the Manage Allocation Journals screen.

6. Costpoint divides the Pool Cost by the Pool Base to obtain the rate or percentage to apply to each account/organization or project/account/organization combination.

7. To obtain the Allocation Amount, Costpoint multiplies the rate or percentage from c) by the units for each account/organization or project/account/organization combination.

8. Costpoint calculates the current posting amount for each service center. If the Apply Allocation method on the Service Center subtask of the Manage Cost Pools screen is YTD, all previous YTD amounts from the General Ledger are collected for each account/organization or project/account/organization combination on the Manage Allocation Journals screen and subtracted from the YTD Allocation Amount to obtain the Current Posting Amount.

If the Apply Allocation method on the Service Center subtask of the Cost Pools screen is Current Period, all previous current period amounts from the General Ledger are collected for each account/organization or project/account/organization combination on the Maintain Allocation Journals screen and subtracted from the Current Period Allocation Amount, giving the Current Posting Amount.

If the Apply Allocation method on the Service Center subtask of the Manage Cost Pools screen is Additive Method, the Allocation Amount calculated for the Standard Rate Service Center is moved to the Current Posting Amount.

• Finally, Costpoint updates the Service Center Cost Report (POOL_SIE_SUPPT table) with the appropriate amounts.

If you are attempting to compute pool rates and have unposted Allocation Journals from a previous period, the program does not perform any computations until you post the journals. This especially affects Manual Service Centers, where the basis (units) can be entered in a given subperiod with no service center allocation computed. If you allocate the service center in the following subperiod, the Compute/Print Pool Rates screen does not work unless you delete or post the Journal.

If you are using hours-based cost pools, do not put any accounts in the base of the pool that do not contain incurred hours, or your rates will be incorrect.

Application of Indirect Rates to Projects

After you have calculated rates for pools, post the Allocation Journal to the General Ledger. At that point, the following tables are updated: FS_SUM, GL_POST_SUM, GL_DETL, and ALLOC_BASIS_JNL_HS. The Allocation Journal is then cleared.

If you have a service center that allocates costs to any project direct-cost accounts (that is, the service center is allocating to ODC items) or to any other account that is included in a subsequent pool's base, you must post the Allocation Journal more than once. Do the "initial pass" on your calculations, post the Allocation Journal, then perform the allocation calculations again and post again. This is required to post the costs into the general ledger for the subsequent pool calculations. If you do not calculate and post allocation amounts which are part of the base of subsequent pools, the service center costs are not posted to the general ledger, and are not included in the basis for those subsequent pools' calculations. This results in incorrect rate calculations. Whether or not multiple posting of the Allocation Journal is required depends entirely on your pool structure and sequencing setup.

After posting the Allocation Journal, you are finished applying rates to projects. Before you can start this process, the Rate Application table must exist and be current. This table contains all of the Base Accounts used by the Compute/Print Pool Rates screen, and is the source for the application of rates to projects.

You must re-create the Rate Application table whenever you modify any one of the following three fields on the Manage Cost Pools screen:

1. Pool Base Account (Pool Base subtask)

2. Pool Sequence Number

3. Apply Rates to Projects check box

To re-create the table, you must go to the Build Rate Application Table screen and click . If you do not know whether or not to re-create the table, check the Manage Allocation Groups screen to see whether the Rebuild of Rate Application Table Required check box is selected.

After you have created the Rate Application table, you can apply rates to projects. This process involves the following:

1. The Rate Application table is read sequentially and each Base Account is processed separately. For each individual Base Account/Organization combination, the General Ledger (GL_POST_SUM) is read, and Current Period, Period-To-Date, and YTD costs or hours (for hours-based pools) are summarized for each project element that had activity within that account/organization combination.

2. For each pool listed in the Rate Application table for that Base Account/Organization combination, Current and YTD Actual, Current and YTD Target and Current and YTD Cost of Money rates are collected from the Rate Table. Override rates are collected from the Project Burden Cost Ceilings screen.

3. If you are using the YTD Rate Application Method (you selected the Year to Date Rates option on the Corporate Settings subtask of the Configure Project Settings screen), the YTD rates are applied to the YTD cost or hours (for hours-based pools) for each project element that was collected in Step 1. This results in the calculation of YTD Actual Burden Cost, YTD Target Burden Cost (or Override Burden Cost if Override Rates were found in Step 2), and YTD Cost of Money Burden for both Actual and Target.

If you are using the YTD Rate Application Method, Costpoint calculates the Current Subperiod Burden Cost by subtracting the previous YTD Burden (burden that was calculated for all subperiods except for the current subperiod) from the newly calculated YTD Burden. The Period-To-Date Burden Cost is calculated in the same manner — all burden calculated for periods less than the current period is subtracted from the newly calculated YTD Burden.

4. After the YTD and Current Period Burden have been calculated, Costpoint updates the Project Reporting Repository (PROJ_SUM and PROJ_BURD_SUM tables) with the following:

5. YTD Direct Cost from the General Ledger (GL_POST_SUM) for each project/account/organization combination

6. YTD Burden Cost by Pool for each project/account/organization combination

7. Current Subperiod and Period-To-Date Direct Cost from the General Ledger (GL_POST_SUM) for each project/account/organization combination

8. Current Subperiod and Period-To-Date Burden Cost by Pool for each project/account/organization combination

5. If you are using the Current Period Rate Application Method (you selected the Current Period Rates option on the Corporate Settings subtask of the Configure Project Settings screen), Costpoint calculates the Current Subperiod Burden by multiplying the Current Period Rate by Current Subperiod Direct Cost or hours (for hours-based pools) for Actual, Target, and Cost of Money. Costpoint derives the Period-To-Date and YTD Burden Cost by adding Subperiod Burden for the Period-To-Date and for the Year-To-Date. Costpoint then performs all of the updates noted in Step 4.