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Delivery Amount, Estimate at Completion

Select this calculation method to recognize COGS based on the Estimated Cost at Completion as a percentage of Estimated Contract Value multiplied by the Delivery Amount.

This method applies only to projects that bill using government form 1443, Contractor's Request for Progress Payment. With this type of billing, delivery invoices are used whenever a finished good is shipped. This selection also gives you the option to recognize an ITD loss up-front instead of prorating it throughout the life of the project.

To use this option, you must complete the Estimated Total Value and Estimated Costs fields. If you enter the same total cost or total value amount that is displayed in the Project Values group box, Costpoint assumes that you want this field to equal the amount of modifications that were entered for this project, and it is updated whenever a new modification is entered. If you enter an amount that is different from the total cost or total value amount, Costpoint does not automatically update whenever you enter a new modification, and you must update this field manually. If you want to recognize an ITD loss up-front, complete the ITD Loss Recognized field. Make any modifications to these three fields before computing the COGS entry.

To calculate COGS using this option, Costpoint subtracts the ITD Loss Recognized, if applicable, from the estimated cost at completion (the Estimated Costs field) and divides the result by the Estimated Total Value. It then multiplies the resulting cost percent by the ITD Delivery Amount, from the Manage Project Bill Summary screen, up to and including the fiscal year and period being calculated, to arrive at the COGS Before Loss. It adds the ITD Loss Recognized to COGS Before Loss to arrive at the final COGS amount. Each time you execute the Create Cost of Goods Sold Entries screen, the balance of the general ledger account designated with the WIP TRANS OUT Function Code for that project's account group is summarized for the fiscal year, including the beginning balance, up to and including the period of calculation. Costpoint subtracts this amount, which is the COGS already posted inception-to-date, from the COGS calculation amount to arrive at the amount to post. The owning organization of the project is used for calculation and posting purposes. Because this method uses delivery invoices for Progress Payment bills, it must be set up at the top level of the project.

Example:

100,000      Estimated Cost at Completion           
- 20,000      ITD Loss Recognized
= 80,000      Subtotal

80,000/80,000 = 100%        Subtotal/Estimated Total Value = Cost Percent

30,000      ITD Delivery Amount
x 1.00      Cost Percent
=  30,000      COGS Before Loss
30,000      COGS Before Loss
+ 20,000      ITD Loss Recognized
=  50,000      COGS Calculated
50,000      COGS Calculated
- 12,000      "WIP Trans Out" G/L Account Balance
=  38,000      Amount of COGS to Post

Because this formula is based on billed delivery amounts, you must post delivery invoices before proceeding with the COGS processing. You must compute the COGS entry (the Create Cost of Goods Sold Entries screen), post it, and then run the Compute Burden Costs screen and Compute Revenue screen. If you want a WIP Project Status Report, you must run the Update Project Status Report Table screen before printing the report.