| IMPORTANT |
| It is extremely important that you set up and work within your own company to maintain your data integrity. If you work within any other company, your exercises will not function as intended and the data of other students might be affected. Predictable exercise results require that your data is isolated in your own company. |
Purpose: There are two types of cost allocation procedures; Actual and Budget. Actual cost allocation procedure is used to allocate cost and revenue balances in the general ledger/ internal ledger periodically.A typical example is the allocation of indirect costs to cost centers. A budget cost allocation procedure is used to perform cost allocation on budget balances.
Steps: To complete the periodical cost allocation exercises, the following data must exist.
A company with three or more cost centers.
Revenue balances by cost center and cost balances not by cost center. These transactions can be entered in the Voucher Entry exercise as follows.
| Account | Cost Center | Debit Amount | Credit Amount |
| 3011 | 820 | 300 | |
| 3011 | 830 | 400 | |
| 3011 | 840 | 600 | |
| 6070 | - | 10000 | |
| 1910 | 8700 |
Note: Account 3011 is a revenue account, 6070 is a cost account and 1910 is an asset account. Code part B is used for cost center.
3. All transactions for the period should be updated to the general ledger when actual cost allocation procedure is used.
4. Two budgets should be defined and cost and revenue balances should exist as follows in one of the budgets in order to allocate budget balances.
| Budget Version | Budget Year | Budget Period | Account | Cost Center | Debit Amount | Credit Amount |
| BV1 | 2012 | 12 | 3011 | 820 | 100 | |
| BV1 | 2012 | 12 | 3011 | 830 | 400 | |
| BV1 | 2012 | 12 | 3011 | 840 | 500 | |
| BV1 | 2012 | 12 | 6070 | - | 10000 |
Purpose: The purpose of this exercise is to set up basic data in the Periodical Cost Allocation tab in the Company window.
Window:
Company
Rollback Mode Execution Mode Period Sequence Validation User Group Year End User Group Correction Single Within a year CC100 YE
Purpose: The purpose of this exercise is to define a voucher type to perform cost allocation and to close accounting period for user groups other than the user group connected to the Periodical Cost Allocation tab in the Company window.
Windows:
Voucher Type
Accounting Periods
Automatic Allotment Store Original Function Group Checked Checked Z
User Group Authorize Level Default Type Function Group CC100 Enter and Approve Yes Z
Window:
Accounting Periods
Purpose: The purpose of this exercise is to show you how to perform periodical cost allocation on general ledger balances. The following example allocates costs to cost centers based on the revenue that each cost center has earned during the period.
Purpose: The purpose of this exercise is to show you how to define cost allocation procedure and allocate cost based on an Automatic type distribution.
Windows:
Cost Allocation Procedures
Purpose: The purpose of this exercise is to show you how to define which code parts will determine the allocation. In this case, we will have the distribution calculate automatically based on the percentage of revenue each cost center generated during the period.
Windows:
PCA Distributions
Query for your procedure.
Create a new table record, and enter the values shown in the table below.
| Distribution ID | Description | Distribution Type | Cost Center |
| 1 | Dist 1 | Automatic | Select check box |
Save the information. The status of the distribution is Defined.
Purpose: The purpose of this exercise is to familiarize you with the five possible step types in the cost allocation procedure. These steps can be used to prepare distributions, prepare factors, generate vouchers, prepare manual vouchers and update vouchers to the general ledger. They can be used more than once in a procedure depending on the complexity of the allocations. The first step for this allocation is to prepare the distribution, which means that you will identify the specific code strings that will determine the allocation percentages.
Windows:
PCA Step Definition
Query for your procedure.
Select the procedure, right-click and then click Definition of Steps
Enter following information in the PCA Step Definition window.
Seq No Step ID Step Type Description Distribution ID 1 Step 1 Prepare Distribution Revenue based 1
Save the information.
Select the line, right-click, and then click Detailed Definition.
Create a new table record, and enter the values shown in the table below.
Step Item Sequence Description 1 Sequence Step
Save the information.
Select the line, right-click, and then click Step Details Specification.
Create a new table record, and enter the values shown in the table below.
Object Object Name Operator Value Type From Value To Value Codepart Account Equal Codepart Enter the revenue account (3011) Codepart Cost Center Between Codepart Enter the first cost center to be used in the allocation (820) Enter the last cost center to be used in the allocation (840)
Note: The purpose of this window is to identify the specific account strings to be used to calculate the ratios for allocation. If you have a range of revenue accounts, you could use the Equal operator and enter the account From Value as 3% if only your revenue accounts start with the number 3. Adjust the entry as necessary for your accounting system.
Save the information.
Right-click in the header of the Step Details Specification window, and then click Show Balances Selected by Step Details to display the balances that will determine the allocation percentages. Correct balances indicate that the steps have been completed correctly.
Windows:
Step Definition
Query for your procedure.
Create a new table record, and enter the values shown in the table below.
Seq No Step ID Step Type Description Posting Mode Distribution ID 2 Step 2 Generate Voucher Voucher Reposting 1
Save the information.
Select the line, right-click, and then click Detailed Definition.
Create a new table record, and enter the values shown in the table below.
Step Item Sequence Description 1 Sequence Step
Save the information.
Select the line, right-click, and then click Step Details Specification.
Create a new table record, and enter the values shown in the table below.
Object Object Name Operator From Value Codepart Account Equal Enter the cost account to be allocated (6070) Codepart Cost Center Has No Value
Note: The purpose of this window is to identify the specific account or accounts that must be allocated to the cost centers based on the ratios created in step one. If there is a range of cost accounts that should be allocated, you will need to adjust the entry.
Save the information.
Select Same Side tab, and enter an asterisk (*) in the Account field, and save the information. Note: If you select Specified for Reposting Mode in step 2, you have to enter values in Opposite Side tab as well.
Right-click in the header of the Step Details Specification window and then click Show Balances Selected by Step Details to view the balances that will be allocated. Correct balances indicate that the steps have been completed correctly.
Windows:
PCA Step Definition
Query for your procedure.
Create a new table record, and enter the values shown in the table below.
Seq No Step ID Step Type Description 3 Step 3 Update Ledger Update GL
Save the information.
Windows:
Cost Allocation Procedures
GL Vouchers Analysis
Open the Cost Allocation Procedures window, and query for your procedure.
Select the line, right-click, and then click Set Active.
Right-click again, and then click Definition of Step. You should see the three steps that were created earlier.
Select the first step, right-click, and then click Execute. The Executed check box should be checked.
Select the distribution connected to the procedure, status of the distribution is Prepared. Right-click and then click Details, you will see following distribution items.
Distr Item ID Cost Center Amount Percent 1 820 1000 10 2 830 4000 40 3 840 5000 50
Execute the Generate Voucher step, Voucher Exists check box should be checked to indicate that the PCA voucher is created. Select the step, right click and then click View Vouchers. You should see the PCA voucher with following postings.
Account Cost Center Debit Amount Credit Amount 6070 820 1000 6070 830 4000 6070 840 5000 6070 10000
Execute the Update Ledger step, a dialog box is displayed showing that there is a voucher in the hold table. Confirm the information. The voucher is then updated to the general ledger.
Open the GL Vouchers Analysis window, and query for Voucher Type PCA.
Select the voucher, right-click, and then click Voucher Details. If the voucher transactions are incorrect, you can roll back them.
Purpose: The purpose of this exercise is to show you how to allocate cost based on a factor. For example, when you want to allocate administration cost to a particular cost center based on the revenue portion of that cost center, you can use Automatic type factor and proceed with the cost allocation.
Windows:
PCA Factors
Query for your cost allocation procedure.
Select the procedure, right-click and then click Factors
Enter following information in the PCA Factors window.
Factor ID Description Factor Type Factor Result Type F1 Factor 1 Automatic Amount
Purpose: The purpose of this exercise is to show how to allocate cost based on an Automatic type factor.
Windows:
PCA Step Definition
Enter a manual voucher as follows and update to the general ledger.
| Account | Description | Cost Center | Amount |
| 7470 | Administration and credit insurance charges | 300 | |
| 3011 | Sales, taxable | 820 | -1000 |
| 3011 | Sales, taxable | 830 | -4000 |
| 3011 | Sales, taxable | 840 | -5000 |
| 1910 | Cash | 9700 |
Open Cost Allocation Procedures and query for your procedure.
Select the procedure, right-click and then click Definition of Steps
Enter following information in the PCA Step Definition window.
Seq No Step ID Step Type Description Factor ID 4 Step 4 Prepare Factor Price Diff F1
Save the information.
Select the line, right-click, and then click Detailed Definition.
Create a new table record, and enter the values shown in the table below.
Step Item Sequence Description Numerator Denominator 1 Sequence Step 1 Select the check box 2 Sequence Step 2 Select the check box
Save the information.
Select the first line, right-click, and then click Step Details Specification.
Create a new table record, and enter the values shown in the table below.
Object Object Name Operator Value Type From Value To Value Codepart Account Equal Codepart 3011 Codepart Cost center Equal Codepart 820
Save the information.
Select the second line, right-click, and then click Step Details Specification.
Create a new table record, and enter the values shown in the table below.
Object Object Name Operator Value Type From Value To Value Codepart Account Equal Codepart 3011 Codepart Cost center Between Codepart 820 840
Save the information.
Windows:
Step Definition
Query for your procedure.
Create a new table record, and enter the values shown in the table below.
Seq No Step ID Step Type Description Posting Mode Factor ID 5 Step 5 Generate Voucher Voucher Reposting F1
Save the information.
Select the line, right-click, and then click Detailed Definition.
Create a new table record, and enter the values shown in the table below.
Step Item Sequence Description 1 Sequence Step
Save the information.
Select the line, right-click, and then click Step Details Specification.
Create a new table record, and enter the values shown in the table below.
Object Object Name Operator From Value Codepart Account Equal 7470
Save the information.
Select Same Side tab, and enter 820 in the Cost Center field, and save the information.
Windows:
PCA Step Definition
Query for your procedure.
Create a new table record, and enter the values shown in the table below.
Seq No Step ID Step Type Description 6 Step 6 Update Ledger Update GL
Save the information.
Windows:
Cost Allocation Procedures
GL Vouchers Analysis
Open the Cost Allocation Procedures window, and query for your procedure.
Select the line, right-click, and then click Definition of Step.
Select the Prepare Factor step, right-click, and then click Execute. The Executed check box should be checked.
Select the factor connected to the procedure, status of the factor is Prepared. You will see the Value % as 10. I.e. Revenue of cost center 820/ revenue of all cost centers * 100
Distr Item ID Cost Center Amount Percent 1 820 1000 10 2 830 4000 40 3 840 5000 50
Execute the Generate Voucher step, Voucher Exists check box should be checked to indicate that the PCA voucher is created. Select the step, right click and then click View Vouchers. You should see the PCA voucher with following postings. Amount is calculated as Balance in account 7470 * Value % of the factor. I.e. 300 * 10% = 30.
Account Cost Center Debit Amount Credit Amount 7470 30 7470 820 30
Execute the Update Ledger step, a dialog box is displayed showing that there is a voucher in the hold table. Confirm the information. The voucher is then updated to the general ledger.
Windows:
Cost Allocation Procedures
Query for your procedure.
Select the line, right-click, and then click Set Closed.
The Date Closed field shows the date, and the User ID field shows which user closed the procedure.
Windows:
PCA Step Definition
Note: If the procedure has been set to Closed, you must set it back to Active before rolling back the steps.
Query for your procedure.
Select the last line in your procedure that was executed, right-click, and then click Rollback.
The Executed check box is no longer checked.
Continue rolling back lines until you have finished.
Note: If you are rolling back lines to change a step, you need to roll back only up to the point of the change. Then execute the steps again, and view the resulting voucher.
Windows:
Cost Allocation Procedures
Query for your procedure.
Select the line, right-click, and then click Copy Procedure.
Enter your company ID and the period for the new procedure. A new procedure line is generated. All steps, distributions, and factors that existed in the original procedure have also been copied.
Note: Copying steps, distributions, and factors works the same way as copying a procedure except that you must specify whether they are being added to the procedure or are replacing existing items in the procedure.