After running the payroll processes, you start the post-run process, Costing. The Costing process accumulates results for transfer to the General Ledger and other applications. This process sorts the run results in accordance with the information you have selected from the Cost Allocation flexfield at all levels, by the following:
Company
Ledger
Cost Center
General Ledger
Labour Distribution Accounts
Examples of the cost allocation of payroll results and of the distribution of employer charges over selected employee earnings appear in the following table.
If your installation also includes Oracle General Ledger, run the Transfer to the General Ledger process after you have run the Costing process. This transfers the results from the Costing process to Oracle General Ledger.
If your installation uses subledger accounting, run the Transfer to SLA process rather than the Transfer to GL process.
The following table displays payroll run results for four employees, using accounts and work structures identified using the Cost Allocation key flexfield. The example Costing Process Results table illustrates how the Costing process allocates these payroll results to:
Accounts and cost centers for the General Ledger
Accounts for cost centers and product lines within cost centers, for labour distribution purposes
Employee | Cost Center | Product Line | Salary | Wages | Overtime | Union Dues |
---|---|---|---|---|---|---|
Employee 1 | Production | H201 100% | 1,000 | 400 | 20 | |
Employee 2 | Sales | H305 100% | 1,500 | |||
Employee 3 | Production | H201 50% H202 50% | 2,000 | 600 | 30 | |
Employee 4 | Sales | H305 20% H310 40% | 1,000 |
The following table illustrates the allocation of costs from these sample run results.
Account Code | Production | Sales | H201 | H202 | H305 | H307 | H310 |
---|---|---|---|---|---|---|---|
Salaries | 2,500 | 1,700 | 400 | E400 | |||
Wages | 3,000 | 2,000 | 1,000 | ||||
Overtime | 1,000 | 700 | 300 | ||||
Union Dues Liability | 50 |
Account Code | Results |
---|---|
Clearing | Account contains balancing credits for earnings Salary, Wages and Overtime, and balancing debits for deduction Union Dues |
When you give links for elements representing employer charges and the costable type Distributed, the Costing process distributes the employer charges as overhead for each employee over a set of employees' earnings. This example shows how employer payments totalling 100 dollars are distributed over a set of earnings including wages and overtime, for the cost center Production and the product lines H201 and H202.
Total paid to Production Cost Center as Wages run result: $3,000.00
Total paid to Production Cost Center as Overtime run result: $1,000.00
Total for Earnings types specified for Distribution: $4,000.00
Ratio for Wages distribution, Production Cost Center = 3000/4000 = .75
Wages overhead = Pension Charge 100 x .75 = 75.00
Ratio for Overtime distribution, Production Cost Center = 1000/4000 = .25
Overtime overhead = Pension Charge 100 x .25 = 25.00
Total paid for Product Line H201 as Wages run result: $2,000.00
Total paid for Product Line H202 as Wages run result: $1,000.00
Total paid for Product Lines H201 and H202 as Wages: $3,000.00
Ratio for Wages distribution, Product Line H201 = 2000/3000 = 0.6667
Product Line H201 overhead = Total Wages overhead $75 x .6667 = $50.00
Ratio for Wages distribution, Product Line H202 = 1000/3000 = 0.3334
Product Line H202 overhead = Total Wages overhead $75 x .3334 = $25.00
Total paid for Product Line H201 as Overtime run result: $700.00
Total paid for Product Line H202 as Overtime run result: $300.00
Total paid for Product Lines H201 and H202 as Overtime: $1,000.00
Ratio for Overhead distribution, Product Line H201 = 700/1000 = .7
Product Line H201 overhead = Total Overtime overhead $25 x .7 = $17.50
Ratio for Overhead distribution, Product Line H202 = 300/1000 = 0.3
Product Line H202 overhead = Total Overtime overhead $25 x .3 = $7.50
Account Code | Cost Center - Production | Product Line H201 | Product Line H202 |
---|---|---|---|
Wages | 3,000 | 2,000 | 1,000 |
Employer Liability Distribution | 75 | 50 | 25 |
Overtime | 1,000 | 700 | 300 |
Employer Liability Distribution | 25 | 17.50 | 7.50 |