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.
This process involves several steps, as follows:
You must set up a pool. This includes setting up cost account/org combinations, base account/org combinations, allocation account/org combinations, and a credit account/org combination, and ensuring that the Service Center check box on the main Cost Pools screen (Projects » Cost and Revenue Processing » Cost Pool Setup) is not selected (see Special Topic PJ-2, "Pool Setup Tips," for more information).
You must post all journals that affect the account/org combinations that were set up for the pool.
You must set up a sequence number either in the Cost Pools screen or the Set Pool Processing Sequence screen (Projects » Cost and Revenue Processing » Cost Pool Setup).
Select a pool for computation in the Compute & Print Pool Rates screen (Projects » Cost and Revenue Processing » Cost Pool Processing & Reporting).
You must run the Build Rate Application Table screen (Projects » Cost and Revenue Processing » Cost Pool Processing & Reporting). If there have been no changes to the pool structure, the sequence number, or the status of the Apply Rates to Projects check box in the Cost Pools screen, this step is not necessary.
Once you have completed all of these steps, the system will have all of the information required to accurately compute indirect rates. The rate computation process is described as follows:
(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 will take place.
The system 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/org combinations that were set up in the Pool Cost subtask of the Cost Pools screen (Projects » Cost and Revenue Processing » Cost Pool Setup). This is the YTD Pool Cost.
The system 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/org combinations that were set up in the Pool Base subtask of the Cost Pools screen (Projects » Cost and Revenue Processing » Cost Pool Setup) as the Pool Base. This is the YTD Pool Base.
To obtain the YTD Rate, the system divides the YTD Pool Cost by the YTD Pool Base.
The system multiplies the YTD Rate by each separate base account/org combination, giving the YTD Allocation Amount for that base account/org combination. The Allocation Journal is updated with this amount for each allocation account/org combination.
In order to calculate the Amount to Post, the system summarizes the YTD posted amounts from the General Ledger (FS_SUM table) for each Allocation Account/Org combination on the Allocation Journal. This is the Allocation Amount that was previously posted YTD.
To obtain the current posting amount, the system 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.
The process (Steps 1 through 4) is computed against current period costs/base to derive current period Rate and Allocation Amount.
The system updates the Pool Rate Table with both the Current Period and YTD Rates.
The system updates the Statement of Indirect (POOL_SIE_SUPPT table) with all appropriate amounts and rates.
If you initiate the rate computation process and the pool being processed is a service center, the system checks the Service Center subtask of the Cost Pools screen (Projects » Cost and Revenue Processing » Cost Pool Setup) to see whether the Calculation of Base flag is Automatic or Manual. If it is Automatic, the system 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 Year to Date.
If you selected the Year to Date option, the system subtracts all previous YTD postings to the General Ledger for the account/org or account/org/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, the system subtracts previous current period postings to the General Ledger for the account/org or account/org/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 into the Maintain Allocation Journal screen for each account/org or project/account/org to which you want to allocate. Once the base amount is available, you can begin the computation process.
The system checks the Service Center subtask of the Cost Pools screen (Projects » Cost and Revenue Processing » Cost Pool Setup) to see whether the service center uses a standard rate (the Apply Standard Cost Per Unit check box is selected). If it does, the system multiplies the Standard Unit Rate from that screen by the units that were entered for each account/org or project/account/org combination in the Maintain Allocation Journal screen (Projects » Cost and Revenue Processing » Cost Pool Processing & Reporting) 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 in the Maintain Allocation Journal screen.
If the Service Center does not use a standard rate, the system uses the following process to derive the allocation amount:
The system checks the Service Center subtask of the Cost Pools screen (Projects » Cost and Revenue Processing » Cost Pool Setup) to see whether the Apply Allocation method is Current Period or Year to Date.
Depending on the method found in a), 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/org combinations that were set up in the Pool Cost subtask of the Cost Pools screen. This is the Pool Cost.
The units that were entered in the Allocation Journal are summarized across all account/org or project/account/org 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 in the Maintain Allocation Journal screen (Projects » Cost and Revenue Processing » Cost Pool Processing & Reporting).
The system divides the Pool Cost by the Pool Base to obtain the rate or percentage to apply to each account/org or project/account/org combination.
To obtain the Allocation Amount, the system multiplies the rate or percentage from c) by the units for each account/org or project/account/org combination.
The system calculates the current posting amount for each service center. If the Apply Allocation method in the Service Center subtask of the Cost Pools screen is Year to Date, all previous YTD amounts from the General Ledger will be collected for each account/org or project/account/org combination on the Allocation Journal screen and subtracted from the YTD Allocation Amount to obtain the Current Posting Amount.
If the Apply Allocation method in the Service Center subtask of the Cost Pools screen is Current Period, all previous current period amounts from the General Ledger will be collected for each account/org or project/account/org combination on the Maintain Allocation Journal screen and subtracted from the Current Period Allocation Amount, giving the Current Posting Amount.
If the Apply Allocation method in the Service Center subtask of the Cost Pools screen is Additive Method, the Allocation Amount calculated for the Standard Rate Service Center will be moved to the Current Posting Amount.
Finally, the system updates the Service Center Cost Report (POOL_SIE_SUPPT table) with the appropriate amounts.
Once 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.
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 (Projects » Cost and Revenue Processing » Cost Pool Processing & Reporting), and is the source for the application of rates to projects.
You must re-create the Rate Application table whenever you make a change to any one of the following three fields in the Cost Pools screen (Projects » Cost and Revenue Processing » Cost Pool Setup):
Pool Base Account (Pool Base subtask)
Pool Sequence Number
Apply Rates to Projects check box
To re-create the table, you must go to the Build Rate Application Table screen (Projects » Cost and Revenue Processing » Cost Pool Processing & Reporting) and click the Process button on the toolbar. If you are unsure whether or not you should re-create the table, check the Allocation Groups screen (Projects » Cost and Revenue Processing » Cost Pool Processing and Reporting) to see whether the Rebuild of Rate Application Table Required check box is selected.
Once you have created the Rate Application table, you can apply rates to projects. This process involves the following:
The Rate Application table is read sequentially and each Base Account is processed separately. For each individual Base Account/Org 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/org combination.
For each pool listed in the Rate Application table for that Base Account/Org 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 (Projects » Project Setup » Project Ceilings).
If you are using the YTD Rate Application Method (you selected the Year to Date Rates option in the Corporate Settings subtask of the Project Settings screen (Projects » Project Setup » Controls)), 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, the system 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.
Once the YTD and Current Period Burden have been calculated, the system updates the Project Reporting Repository (PROJ_SUM and PROJ_BURD_SUM tables) with the following:
YTD Direct Cost from the General Ledger (GL_POST_SUM) for each project/account/org combination
YTD Burden Cost by Pool for each project/account/org combination
Current Subperiod and Period-To-Date Direct Cost from the General Ledger (GL_POST_SUM) for each project/account/org combination
Current Subperiod and Period-To-Date Burden Cost by Pool for each project/account/org combination
If you are using the Current Period Rate Application Method (you selected the Current Period Rates option in the Corporate Settings subtask of the Project Settings screen (Projects » Project Setup » Controls)), the system 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. The system derives the Period-To-Date and YTD Burden Cost by adding Subperiod Burden for the Period-To-Date and for the Year-To-Date. The system then performs all of the updates noted in Step 4.