Distributing costs from cost centers to profit centers

Akuiteo offers a tool for automatic costs distribution, from cost centers to profit centers. Distribution keys are set up in percentages, from a cost entity's (source) project to a profit entity, on which a (target) project has already been set up to receive the various costs.

The example will be based on the following elements:

Entity

  • 1 cost entity: C1
  • 2 profit entities: P1 and P2

Projects

  • AFF1 project belonging to P1 entity
  • AFF2 project belonging to P2 entity
  • AFF3 project belonging to C1 entity

You must set up cost and profit centers and link them together.

To do so:

1 Go to Tools > Setup > General setup > Company > Entity.
2 For each entity, enter the general information.
3 Select the relevant option for the Type:
  • Undetermined
  • Cost center
  • Profit center

Only the last two values have an impact on the entity during cost distribution. This step is essential.

4 In the Analytical grouping section > "Arrival" project field, enter the only target project possible for the distribution of each profit center.
5 Click on the Cost/profit centers tab to link the entities together.
6 On each cost center's record sheet, enter all the profit centers that are likely to receive costs from the relevant center. Otherwise, no distribution rule can be established between them.
7 Save. Proceed now by Defining cost distribution keys.

You can link multiple entities together at once, thus avoiding to repeat the actions for every center.

You must now set up the cost distribution keys, i.e. sharing indirect costs ordered by type among your various projects.

1 Go to Tools > Setup > General setup > Project > Cost distribution keys. All the projects linked to the selected entity or profit center are displayed.
2 Click on to modify the distribution and save:
  • Project code: target project of the profit center;
  • Distribution method: percentage or not distributed (by default);
  • % allocated: the total % of costs to be allocated;
  • Calculation method: Input;
  • Rank: specify the rank number to attribute to the project (ranks 1 are processed first , then ranks 2, etc.);
  • One column per profit center linked to the project's cost center. In each column, the associated distribution % will be entered. The sum of % must be 100%.

This setup expires after one month. At the end of year Y, it is recommended to set up the distribution keys for the 12 months of year Y+1. As such, you will be able to go back and modify some of the periods in case rules change within the year.

Setups that were previously defined enable you to generate an entry for costs breakdown - that cannot be charged on projects - among the various sections of a company.

1 Go to Accounting > Periodic works > Distribution of cost centers over profit centers.
2 In the window, enter the following information and validate:
  • the processing period (required) that must be one or several full months, and that will be last month's dates by default;
  • the journal in which entries will be generated (the miscellaneous transactions journal with the revision type).

The start date will always be the first day of a month and the end date always the last day of a month.

The entry is generated using the existing entries for the projects of the cost centers set up.

Only the entry lines with the following criteria will be processed:

  • must belong to the current company;
  • must have a date included in the specified period;
  • must have an account with a 6 or 96 root;
  • must direct towards a cost center's project which distribution has already been set up.

Only one breakdown entry will be created for the entire company, along with:

  • a compensating line for each original line to break down (similar to the original one, but with reversed Debit/Credit amounts), and
  • a line for each distribution to a target project of the profit centers set up, with reversed amounts, proportional to the percentages entered in the distribution keys.