This chapter contains the following topics:
Section 19.2, "Understanding Actual Project Costs Tracking by Activity"
Section 19.3, "Understanding Project Profiles Definition by Activity"
When you use JD Edwards EnterpriseOne Advanced Cost Accounting (ACA) for activity-based costing, you use the profit management features to perform activity and process cost calculations. You can set up a calculation definition that indicates the type of calculation, source of the balances, driver, and destination for the results. Additionally, if you have a multitiered allocation, you can specify the sequence of calculations.
Before you begin to use activity-based costing, you must define each task that is involved in the process that you want to analyze. After you define each task, you can attach drivers to each task.
For example, in accounts payable, you perform the following tasks:
Receive invoices.
Route them for approvals and coding.
Look up the supplier number.
Add the supplier to the vendor file table.
Verify the payment amount and authorizations.
Input the invoices.
Correct any errors.
Run check processing.
Print the checks.
Sign the checks.
Attach remittances.
Put checks in envelopes.
Mail the checks
When you analyze the time spent on each task and the cost of man-hours, machine time, square footage allowance, and so on, you begin to understand the actual cost of processing accounts payable in-house. Use this information to determine whether you can eliminate some of the steps, or out-source some, or all of the process.
You can track actual project costs by activity with JD Edwards EnterpriseOne Job Cost, JD Edwards EnterpriseOne Product Costing, and JD Edwards EnterpriseOne Product Data Management, and then use the JD Edwards EnterpriseOne Advanced Cost Accounting system to combine the actual project costs for these systems.
Tracking project costs depends on the system:
For job cost projects, you enter and update actual material costs for a project.
The system creates general ledger transactions for actual costs, which can then be processed in the JD Edwards EnterpriseOne Advanced Cost Accounting system.
For manufacturing projects, you enter journal entries for revenues and costs as well as project numbers using flex accounting rules.
For each project number, you assign a cost object type that has edit rules associated with the Work Order Master Tag File table (F4801T).
A project profile consists of the activities that are required to complete a project. For example, the project profile for building a bicycle might include activities such as purchasing parts, assembling frames, building brake assemblies, and painting the assembled bicycle. These activities define the project profile.
Each activity can have numerous cost drivers. A cost driver is a measure of demand on activities or resources that influences costs or revenue. An example of a cost driver is the number of purchase order lines required to purchase the materials needed to complete an activity.
An integration of employee time entry and the JD Edwards EnterpriseOne Advanced Cost Accounting system permits an employee to specify the time that was spent performing certain activities. If the Cost Management Constant for activating cost objects in the Cost Management Constants table (F1609) is turned on, the time entry application activates the cost object fields on the Speed Time Entry Revisions form.
If the cost object fields are activated, four columns appear for cost objects, four for cost object types, and one for item. Together these cost object fields allow the employee to identify the cost objects associated with each line item of time entered.
Time entry is only the first step in the accounting process. After the employee has entered time card information, the system must recognize the cost object data. It is passed to the Employee Transaction Detail File table (F06116), and can then be used by the JD Edwards EnterpriseOne Advanced Cost Accounting system to evaluate time entry by activity.
In addition, if a third-party system is used to store timecard information, the information is uploaded into the Employee Transactions - Batch File table (F06116Z1), then processed into the Employee Transaction Detail File table (F06116). The final step in using the time entry application is for the system to update the Employee Transaction History table (F0618), create journal entries, and prepare for the next payroll cycle. At this time, the cost object information contained in the F0618 table can be processed to the Driver Balances table (F1632) to evaluate the time spent by activity.
This section provides an overview of activity review and the ABC workbench and discusses how to:
Review activity costs.
Set processing options for Activity Cost Inquiry (P1641).
Review activities.
Review the Activity Master Report.
Set processing options for Activity Master Report (R1640).
When you use the JD Edwards EnterpriseOne Advanced Cost Accounting system for activity-based costing, you use the cost management features to perform activity and process cost calculations. You can set up a calculation definition that indicates the type of calculation, the source of the balances, the driver (the basis of the balances), and the destination for the results. Additionally, if you have multitiered allocations, you can specify the sequence of calculations. When you coordinate all cost objects, drivers, and assignments by activity, you can review the resulting information, such as Cost Analyzer Balances, or each separate piece, such as the driver definition or cost object type.
Each assignment has an identifier and allows you to set up multiple configurations depending on your business objective. You can review the parent/child relationships, or hierarchies, of all processes and activities.
When you review activities, you can exit to the following specific forms to access all of the elements of activity-based costing:
| Form | Usage |
|---|---|
| Business Unit Revisions | You can set up or revise departments. |
| Organization Structure | You can set up or revise resources in the chart of accounts. A chart of accounts provides the structure for your general accounting accounts. |
| Activity Cost Inquiry | You can view costs by activity. Theses costs are calculated by reading the Cost Analyzer Balances table. You can review detail information about activity costs by cost object. |
| Activity Revisions | You can enter or change attributes, category codes, driver codes, and so on. |
| Cost Pool Definition | You can identify the group of cost elements that share a common driver. |
| Driver Definitions | You can create and update driver definitions and calculation instructions. You can define how to calculate driver volumes at the summary level. |
| Driver Volume Revisions | You can calculate driver volumes and create driver balances. Based on driver definitions, you indicate which drivers the system calculates by selecting the driver in the Driver Selection program. |
| Cost Object Type Definition | You can set up user defined cost object types. The cost object types can then be included in manual journal entries, batch and standard voucher entries, and invoice entries. |
| Cost Assignment Definition | With ACA, you can create cost assignments that are based on information that the system gathers during transaction processing. You set up flexible calculations to assign costs for managerial accounting or activity-based costing. |
| Cost Analyzer Balances | You can review cost analyzer entries. You can review the details of a specific entry, including the net posting balances and year-to-date total for the selected entry. While you can access Cost Analyzer from ABC Workbench, you can inquire by activities only if you have activated the activity-based costing option in the Cost Management Constants. |
|
Note: You can set the processing options for the ABC Workbench to customize the level at which the system displays multitiered allocations. |
| Form Name | FormID | Navigation | Usage |
|---|---|---|---|
| Work with Activities | W1641B | Activity Based Costing (G1616), Activity Cost Inquiry | Review activity costs. |
| Enter/Change Activity | W1640B | Activity Based Costing (G1616), ABC Workbench
Click Add |
Review activities. |
| Available Versions | W98305WA | Activity Based Costing (G1616), Activity Master Report | Review the activity master report. |
Access the Work with Activities form.
You can review cost analyzer balances by inquiring on activities. By selecting an activity or a level, you can review the following:
Activity or process costs.
Activity costs by cost object.
To review activity costs:
Select the Options tab, complete the following fields, and click Find on the Work with Activities form:
Activity Code
Start Level
View Number
Ledger Type
The system displays costs by activity, based on your processing option selection.
Select the Date tab, complete the following fields, and click Find to search by date:
Fiscal Year
From Period
Thru Period
Click Find, select the activity, and then select Cost Object from the Row menu.
Select the Option tab to review the posted information by business unit on the Cost Object Cost by Activity form.
Select the Cost Objects tab to review detail information about cost objects and types.
Select the Date tab to review posted information.
Click Close to return to the Work with Activities form.
Processing options enable you to specify the default processing for programs and reports.
Specify the lowest activity level code that the system should display in the Activity Cost Inquiry program. If you leave this processing option blank, the system displays activities at level 1 and above.
Specify which set of costs you want the system to retrieve from the cost analyzer.
Values are 1 through 10.
If you leave this processing option blank, the system issues an error and no costs are displayed.
Specify the Fiscal Year the system uses to retrieve activity cost from the cost analyzer.
If you leave this processing option blank, the system does not display costs and an invalid fiscal year error is issued.
Specify the ledger type the system uses to retrieve the activity cost from the cost analyzer. Ledger type is a user defined code (09/LT) that specifies the type of the ledger, such as AA (Actual Amounts), BA (Budget Amounts), or AU (Actual Units).
If you leave this processing option blank, the system retrieves activity costs from the AA (Actual Amounts) ledger.
Specify the first period or the last period that the system includes in the costs.
Values are 1 to 14.
You must enter a value that corresponds to periods in your fiscal date pattern. If you leave this processing option blank, the system uses Period 1.
Specify whether to automatically load data into the grid upon entering the Activity Cost Inquiry program.
Use this feature only if there are not many records to retrieve; otherwise, you may slow the system's performance unnecessarily. If you leave this processing option blank, you will need to do a manual Find.
Specify whether to display the parent and its children activities in the Activity Cost Inquiry program. Values are:
Blank: Single Level. The system will display only the selected activity.
1: Multi Level. The system will display the parent and all of its children activities.
Specify whether to display the original posting cost or ending balance cost in the Activity Cost Inquiry program. Values are:
Blank: Display the ending balance cost
1: Display the original posting cost
Access the Enter/Change Activity form.
To review activities:
Complete the Activity field and click Find on Work with Activity Based Costing Workbench.
Click the + sign in the detail area to display subprocesses.
Select an activity or subprocess and right-click it.
Select Node and then Select from the popup menus.
Make revisions as necessary on the Enter/Change Activity form.
Click OK to return to the Work With Activity Based Costing Workbench.
Alternatively, you can access the Enter/Change Activity form by highlighting an activity or subprocess, and then selecting Activity Revisions from the Row menu.
Select Activity Based Costing (G1616), Activity Master Report.
You can review activities or processes that exist in the Activity Master report (R1640). Based on the data selection and processing options, you can review multiple levels, as well as the hierarchy of processes and subprocesses, of activities or groups. You can use the activity attributes and category codes to identify activity groups or activities with certain characteristics.
Processing options enable you to specify the default processing for programs and reports.
Specify the level of detail that appears on the report. Multilevel will display the parent activity and its corresponding children. Single level will only display the selected activity. Values are:
1: Multilevel report
Blank: Single level report
Specify the view that the system uses to retrieve the activity costs from the Cost Analyzer. Values are 1 to 10.If you leave this option blank, the system issues an error and no costs are printed.
Specify which attribute of the activities should be displayed. If the data is sequenced by a particular attribute, then that attribute number should match with the number entered here. Choose an attribute number 1 to 5.
If you leave this option blank, the system displays attribute 1.