Cost accounting (14)

01 Wednesday Nov 2017

Posted by Ludwig Reinhard in Cost accounting

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Controlling, Cost accounting module, Cost center accounting, Management Accounting, Statistical measure provider templates

In this post, we will analyze how transactions – or more general records – that are entered in other D365 modules can be used as statistical measures for making cost allocations.

To illustrate how such cost allocations can be realized the same demo data that have been used in prior posts will be used again. However, this time, the costs of the car pool cost center no. 120 will be allocated to the other direct cost centers based on the hours that the cost center manager recorded in the project module. Details thereof as well as the allocation bases used can be found in the next screenprint.

Step 1: Record hours in the project module

For recording the hours of the car pool cost center manager, a project with several subprojects – one for each cost center – has been setup.

All projects used in this post are setup with a project group that does not generate a voucher for hour transactions. This has been realized by making use of the ‘never ledger’ project accounting integration setup. As a result, time recordings made in the project module record quantities only.

In a later post, a different project group will be used for the setup of projects that will result in the creation of ledger vouchers.

Step 2: Setup statistical measure provider template

Once all costs are recorded for the different projects, a statistical measure provider template is setup. This template is required to transfer the recorded project hour data into the cost accounting module.

When setting up this statistical measure provider template, one has to select the source table that holds the data, which will be used for the definition of the cost allocation basis. In the example used, the data are held in the ProjEmplTrans table (1). In addition to the table that holds the statistical data, one has to specify (2) the function (sum vs. count), (3) the sum field (hours) and (4) the date field (project date) in order to get the data correctly transferred into the cost accounting module.

Step 3: Setup statistical dimension measure

The next required setup for using the recorded project hours as statistical measure in the cost accounting module is the creation of a new statistical member (‘4. PROJ HOURS’), which is shown in the next screenprint.

The statistical dimension measure is needed for establishing a link between the statistical measure provider template and the cost accounting ledger. For details, see further below.

Step 4: Setup cost accounting ledger

Thereafter, the cost accounting ledger can be setup in the same way as it has been shown in the prior posts.

Please note the reference that is made to the statistical dimension ‘DEMF STAT ELEMENTS’, which includes the newly created statistical dimension member for the project hours.

Setting up the cost accounting ledger necessitates the configuration of the statistical measure data providers. This configuration of the project hour related measure is shown in the next screenprint and requires that a link between the statistical dimension measure (‘4. PROJ HOURS’) from step 3 and the previously setup statistical measure provider template (‘P14_LRE_ProjectHours’) from step 2 is made.

Step 5: Create cost accounting policy

Finally, the cost allocation policies can be created. Please note that the cost allocation for the car pool cost center is made on the basis of the project hours recorded.

Step 6: Process data and overhead calculation

The outcome of processing the cost allocation policy on the sample data can be observed from the next screenprints.

In the next post, we will take a look at the overhead rate policies and how they can be used for making cost allocations. Till then.

Cost accounting (13)

22 Sunday Oct 2017

Posted by Ludwig Reinhard in Cost accounting

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Controlling, Cost accounting module, Cost center accounting, Cost distribution policies, Management Accounting

This post focuses on cost distribution policies and how they differ from cost allocation policies. According to the D365 documentation, cost distribution and cost allocation policies differ in a way that cost distributions always occur at the level of the primary cost element of the original costs.

Applied to the previously used example, cost distribution policies should distribute the costs from the indirect cost centers to the direct ones, as indicated by the arrows shown in the next figure.

To verify this, the following cost distribution policy has been setup:

Please note from the previous screenprint that cost distribution policies also refer to a cost object dimension (‚INDIRECT CC’), as cost allocation policies do. Yet, different from cost allocation policies, a cost element node needs to be specified. The remaining cost behavior and allocation base columns are once again identical to what has been shown for cost allocation policies.

The cost distribution policy used in this post makes once again use of the previously used employee related statistical allocation base.

After setting up the cost accounting ledger and processing the data and the cost distribution policy, the following costs can be observed from the cost controlling workspace for the different indirect cost centers:

As one can identify from the prior screenprints, some costs remain at the indirect cost centers no. 120 and 130. The underlying reason for this outcome are cost distributions that are made within the group of the indirect cost centers. Those distributions are caused by the employee allocation basis used. The next graphical overview aims to illustrate the underlying issue.

To avoid that costs remain at the indirect cost centers, the cost distribution policy is slightly modified in a way that a hierarchy allocation base (‚DEMF_P13_B’) is used.

The major advantage of using a hierarchy allocation base is that one can specify to which cost objects cost distributions (or cost allocations) shall be made. In the example shown above, to the direct cost centers (‘DIRECT CC’) only.

Reprocessing the cost distributions with the modified cost distribution policy finally results in the cost data shown in the next figures.

The next graphic has been prepared for a better overview of the cost distributions made.

Before ending this post, please note the following concluding remarks:

The distributed costs won’t be shown as secondary costs even if a cost rollup policy is defined and assigned to the cost accounting ledger.
The same outcome that has been shown above can be achieved by making use of a cost allocation policy that is not linked to a cost rollup policy.

The next post will introduce how to import statistical measure data from other D365 modules. Till then.

Cost accounting (12)

12 Thursday Oct 2017

Posted by Ludwig Reinhard in Cost accounting

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Controlling, Cost accounting module, Cost center accounting, fix-variable, Hierarchy allocation base, Hierarchy based allocations, Management Accounting

In this post, we will take a look at a more advanced allocation scenario where fixed and variable parts of selected cost elements are allocated from indirect to direct cost centers based on separate allocation bases. The next graphic illustrates the allocation approach applied in this post.

Step 1: Setup dimension hierarchy

To get this allocation approach incorporated into D365, the previously used dimension hierarchy that differentiates between direct and indirect cost centers is used once again.

Step 2: Setup cost behavior policy

The next setup required concerns the cost center behavior policy of the different cost elements. The following screenprint documents how this setup has been made.

Please note the different fixed percentage rates for the cost elements 853000, 854000 and 855000 from the screenshot shown above. To ensure that no other fixed costs are setup and caught by the allocation policy, an additional cost element dimension hierarchy node (‘DEMF CEH’) – with a fixed percentage rate of 0.00% – has been included in the cost behavior policy rule section.

Step 3: Setup hierarchy allocation bases

The third setup step relates to the hierarchy allocation bases that will be used for allocating the fixed and variable costs.

The first hierarchy allocation base (‚DEMF_P12_FIX’) that will be used for the allocation of the fixed costs from the indirect cost centers to the direct cost centers refers to the numbers of bikes produced.

Please note that the allocation base (‘3. BIKE PROD STAT DATA’) is a statistical member that has already been used in prior posts.

The second hierarchy allocation base (‘DEMF_P12_VAR) also allocates costs to the direct cost centers. However, different from the fixed cost part, the employment related statistical measure (‘1. EMPL STAT DATA’) is used as allocation base for the variable costs.

Step 4: Setup cost allocation policies

The cost allocation policy shown next, combines the different ‘pieces’ that have been setup and explained before. Because the setup of cost allocation policies have already been explained in previous posts, no further explanations are made here and reference is made to the previous posts on the new cost accounting module.

Step 5: Setup cost accounting ledger & process data

After the cost accounting ledger is created and the costs and policies processed – not shown for reasons of brevity – the following costs can be observed from the cost controlling workspace for the different cost centers used.

Please note especially the fixed and variable cost columns for the different direct and indirect cost centers.

For a better overview of the fixed and variable cost allocations made, the following graphic has been developed, which summarizes the different costs and allocations for the cost centers used.