Payroll Cost Allocation Key Flexfield Setup

The cost allocation key flexfield creates a structure for the financial accounting of your payroll costs.

The flexfield captures the account codes that you use to create accounting entries, and to report and track your labor costs. Consider all aspects of the flexfield and its uses during your planning.

You can configure one flexfield for each of your legislative data groups (LDG) with these steps.

• Create an account key flexfield structure based on the Cost Allocation key flexfield code.

• Create a structure instance that you associate to appropriate value sets.

• Map the structure instance to a legislative data group.

• Specify rules in Subledger Accounting to use the cost allocation key flexfield instance as the segment source in the Accounting key flexfield for the chart of accounts.

Structure of the Cost Allocation Key Flexfield

Decide what structure to use for the cost allocation key flexfield and use the Cost Allocation Key Flexfield to set it up.

The structure of the flexfield defines the segments such as their order and the value sets used to validate the data entered in the segments. Configure each segment of the cost account. For example:

• Segment 1 = Company

• Segment 2 = Cost Center

• Segment 3 = Account Number

• Segment 4 = Project Code

For example, the salary cost account number is 01.200.60001.987654 for a company with the following cost allocation key flexfield setup:

• Company = 01

• Cost Center = 200

• Account Number = 60001

• Project Code =987654

This table provides decision points to consider before you create the cost allocation key flexfield structure.

Decision	Description
How many cost allocation key flexfield segments does your Accounting flexfield include?	You must create a segment for each corresponding segment of the Accounting flexfield.
Do you need to reserve segments for future use?	You can't update the flexfield structure. You can create segments for later use, such as new lines of business, and display them as needed.
Do you capture context-sensitive information for legislative purposes?	Create additional segments to capture context-sensitive costing, such as separate liability accounts maintained for each state and state tax.
Do you capture information used by other applications?	Create additional segments, for example, to record the breakdown of costs of a project for reporting purposes.

Value Sets for the Segments

You associate a value to each segment using the Payroll Costing Value Sets. Use either existing value sets or create value sets. For example, you might reuse an existing value set that you defined for your accounting flexfield, or create a subset of those values, which only apply to payroll.

Tip:

Consider creating a single value when several accounts use the same value. For example, you might use a value set with a single value of zeros as a placeholder for account segments to be future use segments.

Review diagram for changes:

Segment Labels

You can use segment labels to define the costing levels in order to enter segment information. For example, if the Company segment can be entered at the Department level, choose the segment label Department for the Company segment.

Costing Hierarchy

Costing hierarchy defines the sequence costing entries are applied. You can define costing at different levels within the hierarchy where the lowest payroll structure level has the highest costing priority. If lower levels of the hierarchy aren't defined, they inherit the higher-level values, which simplify entry and prevents you from having to enter duplicate segment values into lower levels of the hierarchy. Enter lower levels of the hierarchy when you want to override in that instance. For example, if the company code segment is set at the payroll level, it's rarely entered for element entries.

Hierarchy structures vary with the Costing Type but all of the levels can be used with the "Costed" indicator setting.

Note:

The costing hierarchy is different for regular element to retro element.

Cost Hierarchy Levels

Consider which level of the cost hierarchy is the primary source of values for that segment and which levels should receive overrides. These decisions control the cost account segments displayed on the costing setup pages.

This table includes examples of the segment labels that you might specify for costing.

Context Segments	Example
Element Entry	Select Element Entry to override all other levels, with one exception. Segments defined for the Priority account for that element override costing at the element entry level. You might select the segment for cost center at the element entry level to cover situations where a person works at another cost center for a payroll period.
Person	Select Person to cost at the payroll relationship and assignment level, and for elements at each of these levels. You might select Person to enable allocation of wages when costs are shared among several cost centers. You might need to override the activity or natural account segment that's usually enabled at the element level.
Position Assignment	Select the position with respect to a legislative data group to define the costing at position level. This is for all the persons who's associated to this position at assignment level.
Job Assignment	Select the job with respect to a legislative data group to define the costing at position level. This is used for all the persons who's associated to this position at assignment level.
Location	Select the location with respect to a legislative data group to define the costing at location level. This is used for all the persons who's associated to this location at assignment level.
Department Assignment	Select the department with respect to a legislative data group to define the costing at position level. This is for all the persons who's associated to this position at assignment level.
Element Eligibility	Select Element Eligibility for natural accounts. You also use this level for cost center segments needed for balance sheet accounts, such as deduction elements that are usually created at the payroll relationship level.
Payroll	Select Payroll for segments that seldom change for the people assigned to the payroll, such as company, line of business, and future use segments. Tip: To report costing by business unit, set up payrolls for persons in a single business unit. Specify a segment at the payroll level to record the account information for the business unit.

Required and Optional Segments

Determine required and optional segments and whether or not you want to define a suspense account. When you set up costing and you don't specify a value for a cost account segment on any level of the costing hierarchy, the following determines the calculation:

• Segment is required or optional

• Suspense account is defined

If you define a segment as:

• Optional, regardless of whether you define a suspense account, the costing result displays a blank (null) value in the segment

• Required and the suspense account is defined, the costing result is placed in a suspense account

• Required and the suspense account isn't defined, the calculation displays an error and the person's results aren't costed

Segments Required for the Offset Account

Decide which segments of the offset account require costing.

The offset account balances the cost account. The offset uses the segments of the cost account unless you specify a different value for the corresponding segment. For instance, if the only difference between your cost and offset accounts is the natural account segment for the element eligibility segment label, you would select the natural account for the offset account.

Number of Structure Instances

You create structure instances of your cost allocation key flexfield that you then associate to legislative data groups. Structure instances share the same set, arrangement, and properties of the cost allocation key flexfield structure. If a legislative data group requires different value sets for the flexfield segments, create a separate instance for that legislative data group.