Hi,

I think you ask about Periodical Cost Allocation in IFS Application. If so you can find detailed description how to configure and use the module PCA in online documentation by pressing F1 in Application.

Best Regards,

Pawel

Hi, 

I’m thinking your referring to the ability to apply overhead rates on part transactions and then periodically revise the rates (similar to what we would do for defense related business). 

The functionality below may be what your looking for.  Else if your looking for a pure GL related overhead adjustment look to Periodical Cost Allocation.   The cost pools and factors are very similar in terms of use case. 

Best regards, 

Thomas

This is from the help. 

Overhead Adjustments

General

The concept of periodic overhead adjustments found in Financial Control enables you to adjust overhead postings already made so that the total of overhead postings after adjustments make up for the actual overhead costs that have occurred for the company. In order to perform overhead adjustments, it is therefore important that the actual and the absorbed overhead costs are analyzed properly before an actual update is performed. This can be done by existing functionality features in the Finance component. When executing an overhead adjustment, all transactions and objects that have been affected by the overhead are adjusted by a given percentage.

Certain basic overhead adjustments are to be specified in order to be able to perform overhead adjustments. Cost detail for the company must be defined to Use OH Accounting Year. Further, a different Cost Source Indicator Definition and different Cost Sources must be used for overheads that are adjustable. Also different Cost Sources and Cost Source Indicator Definition must be used for overheads that should be possible to adjust.

Overhead adjustments can be performed for the following overhead types:

• Delivery OH
• General OH
• Shop Order Labor OH
• Machine OH1
• Machine OH2
• Material OH
• Subcontract OH
• Work Order Labor OH
• Project labor OH

When performing an overhead adjustment for one or several of the overhead types above, they will be adjusted for a specific company, cost source and an accounting year. There are also two different options regarding how to date the additional postings that will be a result of the overhead adjustment:

• Current Date: means that additional postings will get the same date as when the overhead adjustment is performed. This setting must be used when an overhead adjustment is performed on the current accounting year.
• Accounting Year End Date: means that the last date of the accounting year for which the overhead adjustment is made will be set as date on additional postings. This setting can only be used when updating overheads for a previous accounting year. Also, this can only be used when the inventory value statistics have not yet been calculated for the accounting year date. Note: This does not apply to work order labor and project labor overheads. When updating a previous year it is also possible to use the Current Date setting.

It is also possible to enter an adjustment reason and a note text for each adjustment made. These can then be viewed in an overview where a history of previously made adjustments are displayed. The settings for each adjustment are saved here with a unique adjustment ID. In the overview there are also columns for status and error messages so that it is possible to see if the adjustment has been executed and/or if there were any problems during execution.

The size of the adjustment is defined by an adjustment percentage with the adjusted overhead type taken into account. This adjustment is then applied on transactions with cost detail lines. The adjustment difference is then added to each transaction by additional postings that make up for the amount difference.

Note that it is possible to make several updates for the same overhead and for the same accounting year. For example it is possible to make overhead adjustments each month during a year for the same overhead type.

 In addition to updating of affected transactions there is the updating of the inventory parts cost detail information, if it includes one of the updated overhead types. There are also updates of affected order objects like customer order, work order and projects.

The total effect of an overhead adjustment can also be analyzed in the existing overviews for postings by selecting postings that have a reference to a specific adjustment ID.

Here follows an example of an overhead adjustment made for delivery OH:

The first step in performing an overhead adjustment is to analyze the difference for absorbed and actual cost for a specific overhead. This is done by a follow-up of the financial outcome on different accounts in general ledger. In this example we have the following prerequisites:

Budget values for accounting year 2005:

Total cost for the base of the delivery OH (could be a specific department): 100 000

This total cost is then expected to be covered by a delivery overhead of 10 % that is applied on material received on purchase order. The expected absorbed cost is therefore also expected to be 100 000. With absorbed costs we mean the delivery OH costs that are entered on each receipt transaction.

When the year 2005 has passed we do a follow-up of actual and applied costs for the delivery OH. Note that in order to be able to make a proper follow-up of absorbed costs it is important to use the control type for posting cost group and then of course also use a specific posting cost group for the delivery OH.

Outcome values for the accounting year 2005:

The total actual cost for the base of the delivery OH ended up to 120 000

The end result for absorbed costs ended up with 80 000

This means that the absorbed values should be adjusted up with 50% in order to cover the actual costs. An overhead adjustment on 50% should be entered for the delivery OH and accounting year 2005.

If we look at what the adjustment has for an effect on a specific transaction we could for example look at the cost details for a normal receipt transaction:

Before the update the cost details for the transaction could look like this:

The postings created for this transaction would look like this before the update:

If we then perform an overhead adjustment on 50% on the delivery OH we would have the following result.

The updated cost detail information on the transaction would look like this:

Then there will also be additional postings added to the transaction that reflects the updated values for cost detail: