Setting Up Activities

This chapter provides an overview of activities, dimensionality, consumption patterns, and sustaining activities, and discusses how to:

• Define activities.

• Review your activity setup.

• Copy common activities.

Understanding Activities

Activities—the foundation for measuring activity-based cost and profitability—consume resources and represent the processes and procedures within an organization that cause work to be performed by that organization and that consume resources in their performance. For reporting purposes, activities are usually the lowest detail level that you define in Activity-Based Management.

Your decisions about how to define these objects are crucial to obtaining the right type of information from your system. Before you set up these objects, consider the following questions:

• Which activities are central to your organization?

• What resources do these activities consume?

• Which cost objects represent your organization's output?

• What information do you expect to obtain from reports generated by your Activity-Based Management system?

Using one of the many Activity-Based Management activity dictionary templates, identify and define all of your organization's activities in as much detail as your organization requires. Write your activity definitions clearly, and base each one on accurate evaluations of the work actually performed.

There are two types of activities:

• Primary activities represent a final result.

• Secondary activities depend on another primary activity or represent tasks that are not directly related to the output of your organization.

Understanding Common Activities

Many PeopleSoft applications use the concept of activities. Even though the applications use different terminology, we provide a common table to capture Activity-Based Management, PeopleSoft Projects, PeopleSoft Time and Labor, and PeopleSoft Manufacturing, as well as other manufacturing systems.

Projects

Projects and Activity-Based Management do have activities in common; however, an activity in Activity-Based Management is a standalone chunk of work whereas an activity in Projects is a chunk of work that is a derivative of a project.

Time and Labor

Activities from Projects are already integrated with Time and Labor. Activity-Based Management uses the interface between Projects and Time and Labor to gather information related to the time spent on these activities.

See Using Employee Profile.

Manufacturing

Each task in manufacturing can relate to an Activity-Based Management activity on a one-to-one basis.

Understanding Dimensionality

You can define activities as single dimensional or multidimensional.

Single Dimensional Activities

Single dimensional activities exist in one of four possible dimensions:

• Channel

• Customer

• Department

• Prod/Serv (product or service)

Within PeopleSoft Activity-Based Management, you can only assign single dimensional activities to cost objects that exist in the same dimension to ensure that every activity is related to a customer, product, or channel cost object dimension, thus enabling an accurate measurement of cost.

Multidimensional Activities

Multidimensional activities are a combination of two or more Activity-Based Management dimensions (such as a transaction). Multidimensional activities are associated with multidimensional cost objects and are used in transaction costing.

Understanding Consumption Patterns

The consumption pattern of an activity defines the way in which the activity consumes resources for model validation and reporting purposes. There are three types of consumption patterns:

Unit

Unit-level activities must be performed for every unit of product or service. The quantity of the unit-level activities performed is proportional to production or sales volumes.

For example, a traditional accounting system relies on unit-level cost drivers when using allocation bases such as labor hours, machine hours, units of product, or gross sales amounts when assigning indirect costs to cost objects.

Batch

Batch-level activities must be performed for each batch or setup of work performed. The resources required for these activities are independent of the number of units in the batch.

Administrative

Administrative-level activities are operations of an organization that support an overall dimension but provide no greater information when broken down into any further dimension.

For example, for an activity that randomly checks the quality of a particular product, it would not make sense to further break down the activity into the cost of each product sold to each customer.

Understanding Sustaining Activities

Sustaining activities support the overall dimension or organization.

Product-sustaining activities enable the production of individual products or services. Customer-sustaining activities let an organization serve the needs of and manage an individual customer, but are independent of the volume or mix of the products and services sold to that customer.

You can trace sustaining activities to the product, customer, or service for which the activities are performed, but the quantity of resources used in the product- and customer-sustaining activities is independent of the production and sales volumes and quantity of production batches and customer orders.

Defining Activities

Define activities by:

1. Setting up common activities.

2. Defining your Activity-Based Management activities and properties.

Note. To expand on the delivered activity dictionary, use the Common Activities page. Time and Labor, Manufacturing, and Projects also use the activity dictionary. The Application Messaging feature in PeopleSoft EPM let these products automatically share data.

Pages Used to Define Activities

Setting Up Common Activities

Access the Common Activities page (Activity Based Management, Setup, Activities, Common Activities).

To set up common activities:

1. In the Used by group box, select Projects, and then enter a Project Type if PeopleSoft Projects will use this common activity.

2. Select Performance Measurement if EPM uses this common activity.

Note. Consider selecting both check boxes regardless of whether you will actually use the activity with either application because doing so makes the activity more flexible.

To delete the common activity, click the Delete button.

Defining Your Activity-Based Management Activities and Properties

Access the Activities page (Activity Based Management, Setup, Activities, Activities).

To set up activities:

1. Enter a Description for this activity, and then click the Group Message button to enter additional comments about this activity.

2. In the Owner ID field, enter the unique identifier of the user designated as the owner of the resource (for reporting purposes only).

3. Select the type of Activity Use for this activity:

   Primary	Select for activities that represent a final result.
   Secondary	Select for activities that are dependent on another primary activity, or that represent tasks not directly related to your organization's output. Note. Selecting this value makes unavailable the Assignment Type and Activity Group Information group boxes unavailable.

4. Select a Consumption Pattern (which classifies activities for reporting purposes and does not affect the calculation of activities by the Activity-Based Management engine).

   Administrative	Specifies an activity that supports an overall dimension for the organization.
   Batch	Specifies an activity that must be performed for each batch or setup of work performed.
   Unit	Specifies an activity that must be performed for each unit of product or service—the default.

5. Select a Value (High, Low, or Medium) to indicate the level of importance this activity has to your organization.

6. For primary activities, in the Assignment Type group box:

   Target	Select to assign costs to this activity from a source activity or resource.
   Source	Select to assign costs from this activity to another activity (if this is a secondary activity) or a target cost object.
   Source and Target	Select to have the object serve both as the source and the target of values assigned from and to other objects.
   (No selection)	Deselect both check boxes to neither have values derived from nor assigned to this object.

7. Select Sustaining if this is a product- or customer-sustaining activity.

8. In the Activity Group Information group box, specify whether the activity is Multi-dimensional or Single Dimensional. For a single dimensional activity, select the appropriate dimension for the activity: Channel, Customer, Department, or Prod/Serv (product/service).

9. Enter an Attribute ID to further categorize the activity.

   Note. ABPS uses the Job Code Profile page to assign capacity to the job code that can do the activity better.

See Also

Understanding Model Components

Understanding Dimensionality

Understanding Consumption Patterns

Understanding Sustaining Activities

Using Activity-Based Planning and Simulation (ABPS)

Reviewing Your Activity Setup

PeopleSoft Activity-Based Management provides you with two tools to review your activity setup by displaying activities by setID and their settings:

• The Activity Listing page.

• The Activity Listing report (ABC2005).

Pages Used to Review Your Activity Setup

Copying Common Activities

You can also copy common activities to another setID using the Common Activity Copy page.

Page Used to Copy Activities

Copying Common Activities

Access the Copy Common Activities page (Activity Based Management, Setup, Activities, Copy Common Activities).

Select the setID to which you want to copy the common activities, and then click the Copy button. The system automatically saves a copy of your common activity model.