Implementing Burden Costing

10
Implementing Burden Costing
Copyright 2010, Oracle. All rights reserved.
Objectives
After completing this lesson, you should be able to do the
following:
Explain the terminology used in burden costing
Define burden-related setup
Process burden costs and related accounting
10 - 2
Agenda
10 - 3
Overview of Burdening
Implement Burdening
Concurrent Programs
Quantity x Cost Rate = Raw Cost
Raw Cost x Burden Multiplier = Burden Cost
Raw Cost + Burden Cost = Total Burdened Cost
Burden costing calculations
10 - 4
Burden Costing Terminology
Burden Costing Terminology

Burden Cost Code
Burden Costs
Burden Multiplier
Burden Schedule
Burden Structure
Burdened Cost
Cost Base
Raw Costs
10 - 5
Storing Burden Cost Calculations

Expenditure
Item
Expenditure
Type
Raw Cost
Burdened Cost
Original
Clerical
140.00
160.00
Example: Burden cost on the

same expenditure item
Expenditure
Item
Expenditure
Type
Raw Cost
Burdened Cost
Original
Clerical
140.00
140.00
0.00
20.00
Burden Transaction Fringe
Example: Burden cost on a

separate expenditure item
10 - 6
Accounting for Burden Costs
Oracle Project
Costing
Oracle Subledger
Accounting
Generate accounting
events and create
accounting
Accounting for
burden cost
components
Oracle General
Ledger
Transfer journal
entries to GL
Accounting for
total burdened
costs
Options for burden cost accounting
10 - 7
Project Types and Burdening
Project Type, Costing Tab:
Whether to burden?
Default burden schedule
Allow schedule overrides?
How to store burden costs
Total burdened cost

accounting?
Each project is assigned
a project type.
10 - 8
Quiz
Which of the following programs is used to summarize burden
costs and creates expenditure items for the burden
transactions?
a. PRC: Add New Organization Burden Compiled Multipliers
b. PRC: Create and Distribute Burden Transactions
c. PRC: Interface Supplier Costs
d. PRC: Create Accounting
10 - 9
Agenda
10 - 10
Implement Burdening
Concurrent Programs
Burden Costing Implementation Steps

Step
Required?
Setup Level
Define cost bases and cost base types

Define burden cost codes
Define burden structures
Set the profile option PA: Default Burden
Schedule Type
Yes
Yes
Yes
Yes
Site
Site
Site
Operating Unit
Define burden schedules

Implement burden costing extension
Set the Profile Option PA: Report Separate
Burden Transactions with Source Resources
Yes
No
Yes
Site
Site
Site
Set the profile option PA: Create Incremental

Transactions for Cost Adjustments Resulting
from a Burden Schedule Recompilation
No
Site
Burden Costing Implementation Steps

10 - 11
Cost Bases and Cost Base Types
Cost Base: Labor

Cost Base Type: Burden Cost
For example, you can use the cost base Labor

group labor costs on a burden structure.
10 - 12
Burden Cost Codes
Cost Code: Fringe

Expenditure Type: Fringe Benefits
For example, a cost code of Fringe can represent health

benefit costs associated with an employee's raw labor cost.
10 - 13
Burden Structures
Components of a Burden Structure
Burden Cost
Codes
G&A
Overhead
G&A
Fringe
Handling
G&A
Cost Bases
Labor
Material
Expense
Expenditure
Types
Professional
Supplies
Clerical
Construction Meals
Materials
Airfare
Sales
10 - 14
Travel
Burden Structures
Cost Code
Precedence
Multiplier
Raw Cost
Amounts
100.00
Fringe
.10
10.00
Overhead
.10
10.00
G&A
.10
10.00
Burdened Cost
130.00
Example 1: Additive
Note: You assign the multiplier on the Burden Schedule.
10 - 15
Burden Structures
Cost Code
Precedence
Multiplier
Raw Cost
Amounts
100.00
Fringe
10
.10
10.00
Overhead
20
.10
11.00
G&A
30
.10
12.10
Burdened Cost
133.00
Example 2: Precedence
Note: You assign the multiplier on the Burden Schedule.
10 - 16
Burden Schedule Types and Burden Schedules

Firm Versions (example)
Q1
Q2
Q3
Q4
Provisional Versions (example)

Q1
Q2
Q3
Q4
Actual Versions
FY 2010
Firm burden schedule versions compared to provisional schedule
versions.
10 - 17
Assigning Burden Multipliers

HQ
Overhead = .9
Fringe = .5
West
East
Overhead = .8
New York
Fringe = .6
Bangor
San Jose
Fringe = .3
Example: Burden Multiplier Hierarchy

10 - 18
Defining Burden Schedules

Define Schedule
Burden Structure
Burdening Hierarchy
Compile
Schedule Type
Version Date Range
Multipliers
Components of a burden schedule

10 - 19
Assigning Burden Schedules
Project Type
Project
Task
Optionally, override default

schedules for projects and tasks.
10 - 20
Default
hierarchy
Burden Costing Extension

Process expenditure
items
Calculate raw cost
Calculate burden cost
Call Burden Costing

Extension
Assign burden
schedule
Total burdened cost

Burden Costing client extension processing flow
10 - 21
Reporting Separate Burden Transactions with

Source Resources
(1) Set the profile option PA:
Report Separate Burden
Transactions with Source
Resources
(2) If Yes, then implement

the Burden Resource
Extension.
Optionally, map summary burden transactions to the same

resource class as their source raw cost transactions for
reporting purposes.
10 - 22
Accounting for Cost Adjustments Resulting from

Burden Schedule Revisions
Correct burden multipliers
Compile
Oracle Project Costing

marks affected transactions
for reprocessing.
When a burden schedule change affects existing transactions, Oracle

Project Costing marks the affected transactions for reprocessing.
10 - 23
Accounting for Cost Adjustments Example 1: Total

Burdened Costs without Incremental Transactions
Transaction
Item No.
Accounting Transactions
Debit
Labor Cost
Labor Expense
100
Credit
Payroll Clearing
100
Labor Expense
100
Payroll Clearing
100
Labor Expense
100
Payroll Clearing
100
Accounting for Raw Cost

PA: Create Incremental Transactions for Cost Adjustments Resulting
from a Burden Schedule Recompilation profile option = No
10 - 24

Burdened Costs without Incremental Transactions
Transaction
Item No.
Debit
Labor Cost
Project Cost Inventory
300
Credit
Labor Burdening Inventory Transfer
300
300
300
400
400
Accounting for Total Burdened Cost

10 - 25

Burdened Costs with Incremental Transactions
Transaction
Item No.
Debit
Labor Cost
Labor Expense
100
Payroll Clearing
Credit
100

from a Burden Schedule Recompilation profile option = Yes
10 - 26

Burdened Costs with Incremental Transactions
Transaction
Item No.
Debit
Labor Cost
300

Credit
300
100
100
Accounting for Total Burdened Cost

10 - 27
Accounting for Cost Adjustments Example 3: Summarized

Burden Cost Components without Incremental
Transactions
Transaction
Item No.
Debit
Labor Cost
Labor Expense
100
Credit
Payroll Clearing
100
Labor Expense
100
Payroll Clearing
100
Labor Expense
100
Payroll Clearing
100

10 - 28

Burden Cost Components without Incremental
Transactions
Transaction
Item No.
Fringe
Project Fringe Expense
Debit
50
Fringe Absorption/Recovery
50
25
Overhead
Project Overhead Expense
25
150
Overhead Absorption/Recovery
Credit
150
75
75
Accounting for Summarized Burden Components

10 - 29

Burden Cost Components with Incremental Transactions
Transaction
Item No.
Debit
Labor Cost
Labor Expense
100
Payroll Clearing
Credit
100

10 - 30

Burden Cost Components with Incremental Transactions
Transaction
Item No.
Debit
Fringe
50
50
25
Overhead
25
150
Credit
150
75
75
Accounting for Summarized Burden Components

10 - 31
Quiz
You must implement burden costing extension to implement
burden costing?
a. True
b. False
10 - 32
Quiz
A burden structure determines how you group cost bases and
establishes the method of applying burden costs to raw
costs. Expenditure types classify raw costs and burden
cost codes classify burden costs.
a. True
b. False
10 - 33
Quiz
You can assign burden schedules to which of the following
entities?
a. Project types
b. Projects
c. Expenditure items
d. Tasks
10 - 34
Agenda
10 - 35
Implement Burdening
Concurrent Programs
Burden Calculation in Costing Programs
Expenditure
Items: With
Raw Cost
Amounts
Is Project
Type
Burdened?
Yes
See next
page
10 - 36
No
Item is not burdened

Assume Burden
Multiplier = 0
Burden Cost = Raw Cost x Burden

Multiplier
Burdened Cost = Raw Cost + Burden
Cost
Task Burden
Schedule
Override
Exists?
No
Yes
Use
Override
Yes
Project Burden
Schedule
Override
Exists?
No
See next
page
10 - 37
Use Task
Burden
Schedule
Expenditure
Type in cost
base in structure
of schedule
revision?
No
Item is not burdened

Assume Burden
Multiplier = 0
Yes
Use Burden Multipliers from
appropriate schedule revisions
If a Schedule ID Override exists,
use that revision
Burden Cost = Raw Cost x Burden Multiplier
Burdened Cost = Raw Cost + Burden Cost
10 - 38
Concurrent Programs: Total Burdened Cost

Accounting
Concurrent programs in Oracle Project Costing you run to
account for Total Burdened Costs:
PRC: Distribute Total Burdened Costs
PRC: Generate Cost Accounting Events
Process Category = Total Burdened Cost
PRC: Create Accounting

Process Category = Total Burdened Cost
10 - 39
Concurrent Programs: Account for Summarized

Burden Cost Components
account for burden costs as separate, summarized burden
transactions:
PRC: Create and Distribute Burden Transactions
PRC: Generate Cost Accounting Events
Process Category = Burden Cost
PRC: Create Accounting

Process Category = Burden Cost
10 - 40
Maintenance Concurrent Programs

maintain burden schedules:
PRC: Add New Organization Compiled Burden Multipliers
PRC: Compile All Burden Schedule Revisions
10 - 41
Quiz
Which of these concurrent programs would you run to
maintain burden schedules?
a. PRC: Add New Organization Compiled Burden Multipliers
b. PRC: Generate Cost Accounting Events
c. PRC: Compile All Burden Schedule Revisions
d. PRC: Create Accounting
10 - 42
Summary
In this lesson, you should have learned how to:
Implement burden costing
Describe the options for setting up burden costing
Identify the programs for processing burden costing
10 - 43

Implementing Burden Costing

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Implementing Burden Costing

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10

Implementing Burden Costing

Copyright 2010, Oracle. All rights reserved.

Copyright 2010, Oracle. All rights reserved.

Copyright 2010, Oracle. All rights reserved.

Quantity x Cost Rate = Raw Cost

Raw Cost x Burden Multiplier = Burden Cost

Raw Cost + Burden Cost = Total Burdened Cost

Burden costing calculations

Copyright 2010, Oracle. All rights reserved.

Burden Costing Terminology

Burden Costing Terminology

Copyright 2010, Oracle. All rights reserved.

Storing Burden Cost Calculations

Example: Burden cost on the

Burden Transaction Fringe

Example: Burden cost on a

Copyright 2010, Oracle. All rights reserved.

Accounting for Burden Costs

Options for burden cost accounting

Copyright 2010, Oracle. All rights reserved.

Project Types and Burdening

Project Type, Costing Tab:

Default burden schedule

Allow schedule overrides?

How to store burden costs

Total burdened cost

Copyright 2010, Oracle. All rights reserved.

Copyright 2010, Oracle. All rights reserved.

Copyright 2010, Oracle. All rights reserved.

Burden Costing Implementation Steps

Define cost bases and cost base types

Define burden schedules

Set the profile option PA: Create Incremental

Burden Costing Implementation Steps

Copyright 2010, Oracle. All rights reserved.

Cost Bases and Cost Base Types

Cost Base: Labor

For example, you can use the cost base Labor

Copyright 2010, Oracle. All rights reserved.

Burden Cost Codes

Cost Code: Fringe

For example, a cost code of Fringe can represent health

Copyright 2010, Oracle. All rights reserved.

Components of a Burden Structure

Copyright 2010, Oracle. All rights reserved.

Copyright 2010, Oracle. All rights reserved.

Copyright 2010, Oracle. All rights reserved.

Burden Schedule Types and Burden Schedules

Provisional Versions (example)

Copyright 2010, Oracle. All rights reserved.

Assigning Burden Multipliers

Example: Burden Multiplier Hierarchy

Copyright 2010, Oracle. All rights reserved.

Defining Burden Schedules

Components of a burden schedule

Copyright 2010, Oracle. All rights reserved.

Assigning Burden Schedules

Optionally, override default

Copyright 2010, Oracle. All rights reserved.

Burden Costing Extension

Calculate raw cost

Calculate burden cost