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Example Calculations for Hours-Based Cost Pools

All computed invoices and revenue processing, where burden is applied, consider the composite rates developed for the hours-based cost pools. These processes multiply the hours-based composite rates (amount per hour) by incurred hours (eligible hours in Open Billing Detail and incurred or allowed hours in PROJ_SUM based on revenue formula) to get the amount of burden to recognize. If dollars-based cost pools also exist, Costpoint sums burdens from both types of cost pools and includes them in the calculation.

Direct cost ceilings are not considered for accounts in the base of hours-based cost pools. However, burden cost ceilings and burden fee overrides are considered.

Below is an example of how Costpoint develops the composite rates for a combination of dollars- and hours-based cost pools. In the example below, a labor account, 05000-010, is charged $1,000 and 100 hours.

Pool Sequence 1

Computed Composite Rates
Cost Pool 1001: Dollars-Based Fringe Pool

Amount per Hour = 25%

Dollars-Based Composite Rate = 25%

Burden = $250 ($1000 * 25%)

Pool Base:

Base Account Allocation Account
05000-010 FRNGE-010

Pool Sequence 2

Computed Composite Rates
Cost Pool 1002: Hours-Based Overhead Pool

Rate = 3.00

Hours-Based Composite Rate = 3.00/hour

Burden = $300 (100 hours * 3.00/hour)

Pool Base:

Base Account Allocation Account
05000-010 OVRHD-010

Pool Sequence 3

Computed Composite Rates
Cost Pool 1003: Dollars-Based G&A Pool

Rate = 60%

Two rates are derived:
  1. Dollars-Based Composite Rate = 75%

    Burden = $750 (($1000 * 60%) + ($250 * 60%))

  2.  Hours-Based Composite Rate = 1.80

    Burden = $180 ($300 * 60%)

Pool Base:

Base Account Allocation Account
05000-010 GNA00-010
FRNGE-010 GNA00-010
OVRHD-010 GNA00-010

Because pool 1003 has an allocation account from an hours-based cost pool, burden that originated from the hours-based cost pool is applied against the incurred or eligible hours (100 hours) for account 05000-010 and burden that originated from the dollars-based cost pools is applied against the incurred, eligible, and/or allowable costs ($1000).      

In this example, the total burden applied against account 05000-010 equals the total of the burdens computed above, which is $1480 ($250 + $300 + $750 + $180).

Field Description
Eligible Hours

Records in Open Billing Detail, where the account/org resides in the base of the hours-based cost pool, are considered for burdening.  

The hours eligible for burdening, if the Bill Cost Incurred on Cash Basis check box is not selected on the Setup Information tab of the Manage Project Billing Information screen, are the transaction hours less the hold hours, write off hours, and previously billed hours from Open Billing Detail.

If the Bill Cost Incurred on Cash Basis check box is selected on the Controls tab of the Project Billing Information screen, Costpoint applies the composite hour rate against the cash basis hours in Open Billing Detail. The Update Cash Basis Information process computes these hours when computing the cash basis dollars. This process applies only to AP or PO vouchers. For example, for a $2,500 voucher on which $1,500 is paid, the Update Cash Basis Bills process updates Open Billing Detail in the following way:

Account Org Trn Amount Trn Hours Cash Basis Amount Cash Basis Hours
05000-010 1 $1,000 100 $600 60
05000-020 1 $900 90 $540 54
05000-020 1 $600 0 $360 0

When computing burden, Costpoint applies the hours-based composite rate against incurred hours in PROJ_SUM. Only one revenue formula, Loaded Labor W/Burden W/Fee Plus Non-Labor W/Burden W/Fee, uses allowable hours when computing revenue on hours. All other formulas use incurred hours during revenue calculation.