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Pools Series

Costpoint Pools Series: Allocation Mechanisms

Cost Allocation Mechanisms

Facilitate distribution of dollars from cost entities to other entities that receive

provided benefit or service.

The Service Center

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: Stores cost to be allocated to other : I I 1 benefitting entities 1

I I �-----------------------------------------------i Q - Appears on project reports as a direct expense !I I I I �-----------------------------------------------

:9 i 1 No usage of a targeted or budgeted rate 1

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I I 1 Uses "Manage Cost Pools" screen with 1

I I 1 option to use "Units Usage" 1

I I �-----------------------------------------------The Multi-Job Allocation

All allocations are expressed using projects. Multi-jobs have the following functionality:

The allocation The final Costs may Indirect basis is allocation is be allocated costs can expressed in recorded to a at either a be applied amount, hours, project so that current on top of or a percent- the allocation, period or a the direct age. itself, has the year to date costs at These costs appearance of basis,and either the are collected in a direct all actual actual or project- expense on all costs are target rate. account-org project reports. distributed. combinations.

Service Center This department furnishes services to other organizations within the

company. In many organizations, the costs of a particular department are collected, and then, they are allocated to other organizations or projects

based on a rational and consistent methodology.

Costs that are collected and need to be allocated Entities receiving or absorbing the allocation.

Allocated costs are directly charged to a receiving organization and/or project.

The Cost Pools

The cost pool is the most traditional mechanism for use by a government contractor to allocate out indirect expenses. These costs include items such

as fringes and overhead in addition to general & administrative expenses. Rates associated with a cost pool:

The Project Transfer

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: Special one-time form of allocation :�---------------------------------------------- I

: Utilized when Bid & Proposal projects evolve into a ] [ _________________ Billable effort _________________ · __ :

: Useful for erroneous entries or restructuring of project ] [ _______________ structures/numbers _________________ :

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: Operational within the confines of single fiscal year . :�---------------------------------------------- I

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: Uses Project Transfer Information screen -

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Cost Pools Concepts A cost pool enables a user to store the allocation at an actual rate in

addition to a budgeted or target rate for reporting and revenue recognition.

1 Impact on Chart of Accounts

2 General Ledger Driven

3 Unlimited Water Falling

4 Cost Pool Changes Necessitate

Special Processing

5 Supporting Allocation Accounts

6 Correlation with a Fiscal Year

7 Indirect Variances

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Costpoint Pools Series: Processing, Replication, & Specialized Pools

Pool Processing: From Start to Finish The pool processing cycle is relatively straightforward, but specific processes must be run in the appropriate order.

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: ••• Generally, users run through the entire cycle : I I

: once a month at the very end of the month after :: all other transactions have been posted. I I

I _______________________________________________ J

:

•

There usually is no harm in running these : I I

: processes more than once since the compute : : pool rates process can compensate for the : : incremental activity during the month. : I _______________________________________________ J

� Projects> Cost and Revenue Processing> Cost Pool Processing

,d �

Option

Description*

start Ead

Fiscal Year* Period* Subpd* Ending Date

Number* ��-• -� � CJ CJ c--J

CJ

,ers/PoolS* [All

[O andBelow vel* ["""a andBelow

Seq No Pool No •I � C-=:J

D Show Amounts in Thousands � Show Base Account Names

Seq No Pool No � c-=i

"°'m

D Ignore Project Account Group Validation D Delete Prior Non-Primary Allocations

Circular References Having the result of one computation (such as the Pool Debit Allocation Account) within the pool cost or base of the same

pool in which it is associated. Process to check for existence of Circular References

Compute and print the pool rates. 1

Post the pool allocation journal as usual. 2

Examine the Manage Allocation Journal and specifically focus on the 3 columns Current Allocation Amount and Current Amount to Post.

Repeat the process to compute the pool rates. After this run, there 4 should be nothing (O's) 1n the Amount to Post column.

Otherwise, circular reference probability is high. 5 Review all pool cost setup.

Restrict posting to the General Ledger until the 6 test is complete.

Create Pool Links

Build Rate Application Table

Compute and Print Pool Rates

'©, Print Statement of Indirect Expenses

-Print Allocation Journal Edit Report

flJ Reconciliation

Post Pool Journal

Two Allocation Models Due to the nature of an organization, a cost pool is not always as simple as just allocating costs from one place to another.

The two specialized pool allocation models are:

Financial Statement Reclass Pool

The Reclass Pool involves a

"mathematical trick". All of

the allocated costs are sent

to their appropriate

destination, but the contra

amount is temporarily

booked to a "dummy org".

Intermediate Pool Similar to a regular cost pool

except that there is no

actual rate that appears on

the Project Status Report.

The computation of the rate

will only appear on the State­

ment of Indirect Expenses.

Computation is for internal

purposes.

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Costpoint Pools Series: Project Transfer & Multi-Jobs

Project Transfer Begins with the existence of two projects. In many cases, the costs start out with a non-billable entity that is subsequently

moved to a new billable effort.

� Projects> Cost & Revenue Processing> Project Transfer Processing> Manage Project Transfer Information

Mapping Constraints The accumulated project costs of a single node or the entire project tree will map to a single project node. In the transfer,

the dollars associated with the Organization may be addressed with three possible options:

OWNING 8 •·•

Costs will be recorded tothe owner of the destination

project regardless of theCosts will be retained by

the originating org.Costs will be re-classed to

one designated org.originating org.

Account Mapping

IThe mapping of the accounts from the source project to the destination project can be accomplished by:

. Individually mapping accounts one for one

Project to Project (Multi-Job) Allocation

By mapping ranges of accounts to single accounts(many to one)

The Multi-Job allocation mechanism is frequently associated with a service center; however, the allocation involves oneoriginating project and multiple benefiting destination projects.

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1 Frequently associated with a service center 1

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: 0 Involves one originating project and multiple :I I

: benefiting destination projects :�-----------------------------------------------

: (!) : : · Based on the Project Ledger :I I

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The transaction information will include:

Three Allocation Basis Methodologies

When designating the base, it is always specified as aspecific project-account-org combination.

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