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How to Set Up Service Centers

You typically use service centers to allocate costs that have a units-type basis.

Examples of typical service centers include:

  • Facilities: Allocated on square footage
  • Copier costs: Allocated on a per page basis
  • Computer costs: Allocated based on where the computers reside, or on who uses them
  • Human Resources: Allocated on headcount
  • Purchasing: Allocated on number of POs or PRs
  • Telephones: Allocated on number of units

Set up a Service Center by creating a pool (with an Allocation Group Number, Pool Number, Sequence Number, and Fiscal Year) and by selecting the Service Center check box on the main Manage Cost Pools screen. You must also complete the Pool Cost subtask, just as you would for a "regular" pool, and the Default Accounts subtask must contain a Credit Account/Org combination. Then open the Service Center subtask and make the following choices:

  • Is the Calculation of Base Manual or Automatic? If you select the Manual option, you must enter the basis for this type of allocation. You must then enter the basis each period on the Manage Allocation Journals screen. This also means that you do not have to set up Pool Base Accounts on the Pool Base subtask — they are not used. Additionally, the Base Type of units is available for this type of allocation.

    For Manual service centers, you can populate the Manage Allocation Journals screen using the Import feature. Click the Import button to import allocation rows for a period or a range of periods from the Allocation Basis Journal History table so that you do not have to manually enter them.

    Note: If you have a YTD Manual Service Center that is allocated using units as the basis, enter information in both the Current Number of Units and YTD Number of Units columns on the Manage Allocation Journal screen. The Import feature sums the current units quantity from the Allocation Basis Journal History table and inserts this number in both the Current Number of Units and YTD Number of Units fields. If you do not enter data in these columns, the number of units imported is zero.

    If you select the Automatic option on the Service Center subtask, Costpoint derives the base, just as it does for a regular pool, by summarizing the dollars or hours in the account/organization combinations specified in the Pool Base subtask. You must set up the Pool Base subtask, and the Basis Type for this allocation can ONLY be Dollars or Hours (rather than Units).

  • Is there a standard cost per unit to apply? If you do not select the Apply Standard Cost Per Unit check box, each base account/organization combination receives its proportionate share of the cost to be allocated. This type of allocation ensures that the costs contained in the Service Center are fully allocated.

    If you select the Apply Standard Cost Per Unit check box, Costpoint multiplies the Standard Unit Rate that you specify by the amount of base for each base account/organization combination to arrive at the allocated amount. In this case, the costs contained in the Service Center cannot be fully allocated. At the end of the fiscal year, the unallocated amount can be journalized to an overhead account or the service center can be changed to a regular service enter and the unallocated amount can be distributed.

  • Which Apply Allocation method should you use? Current Period and YTD refer to the adjustment method used for posting the allocated amount. If you select either of these options, Costpoint calculates the amount to allocate and then subtracts from it any amounts previously posted for the Current Period or YTD (depending on the selection here) and posts the difference. Remember that if you select the YTD method, you must always enter a year-to-date base. The year-to-date base is entered in the YTD Number of Units column on the Manage Allocation Journals screen. If you are working with a headcount or square footage, this is not a problem. However, if you are working with units, you must keep track of the year-to-date units used.

    If you select the Additive Method option, Costpoint calculates the amount to post by using the Standard Unit Rate specified and posts that amount with no adjustment for any amounts previously posted. You generally use this method if you must enter units multiple times during a period.

After you have completed this subtask, the service center is ready to go. If it is a manual service center, you must enter the base on the Manage Allocation Journals screen before any allocation can be made, but no further setup is required.

As far as processing, "regular" pools and "service center" pools can be easily allocated one after the other within the same Allocation Group in a waterfall pattern.