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Case Study: Using Cost Accrual for a Project

A Project is created with the following values:

Project Number CA-Project01
Project Name CA-Project for Documentation
Distribution Rule WORK/WORK
Employee Bill Rate Override Amy Marlin 1,000 hourly

One additional task, Task 2, is added.

Budget and Fund the Project

The following uncategorized, non-time-phased budgets are created:

Cost Budget:
Budget Type Approved Cost Budget
Quantity 1000
Raw Cost 250,000
Revenue Budget:
Budget Type Approved Revenue Budget
Revenue 1,000,000

Project CA-Project01 is funded in agreement CA-01 with a soft limit purchase order from the customer for $1,000,000 US. The budget and funding are baselined.

Enter Timecard

The following pre-approved timecard batch is entered, submitted, and released:

Batch: CA-01-tc

Ending Date: 13-APR-1997

Employee: Marlin, Amy

Expenditure Item Date Project Number Task Number Expenditure Type Quantity Raw Cost
12-APR-1977 CA-Project01 1 Professional 50 3000
13-APR-1997 CA-Project01 2 Professional 50 3000
  100 6000
Table 1 - 64. (Page 1 of 1)

The PRC: Distribute Labor Costs process is run. The cost rate for Amy Marlin is $60.00 per hour.

The following accounting entries are created for these costs


Generate Revenue and Cost Accrual

Because this project uses the WORK/WORK revenue distribution rule, the draft revenue is calculated as follows:

(100 hours * $1,000 per hour) - 0 = $100,000

The cost accrual is calculated as follows (using the algorithm in Figure 1 - 39):

(100,000 / 1,000,000 * 250,000) -0 = 25,000

The cost accrual events are created and accounted as follows:


Revenue accounting entries are created as follows:


The draft revenue is released and interfaced to GL.

Close the Project

Using the Project Closing procedure, the project status is set to Pending Close. This status change initiates the closing cost accrual entries. The Generate Draft Revenue process is run and three events are automatically created and accounted for as follows:


The draft revenue is released and interfaced to GL.

The project status can now be changed to Closed. If the project is reopened (if its status is changed to an active status with a system status other than Pending Close or Closed), these three events are reversed the next time the Generate Draft Revenue process is run for the project.

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