Define activities, activity
rate information, and activity and cost type associations. Use activities to
assign indirect costs to items based upon the effort expended to obtain or
produce the item, rather than as a percentage of a direct cost or an amount per
item.
Activities
are processes or procedures that consume costs and time. In addition to cost
elements and subelements, costs may be associated with an activity. Activities
may be directly related to building items, such as runtime or setup time; or they
may be indirect, such as purchase order generation, payroll, and engineering
activities. The goal of activity based cost accounting is to accurately
identify your product costs, especially overhead costs.
Prerequisites
To
define, update, or delete cost information, the Activities: Maintain security
function must be included as part of the responsibility.
Navigate
to the Activities window.
Enter
an activity.
Check
Multi-Org to indicate whether the activity name is a multi-organization
activity to share with other organizations.
Note: If
disabled, the name is only available to the organization that creates it. If
enabled, only the activity name is shared, not the activity.
Select
the activity default basis.
Basis
is the method used to determine how to charge a transaction or apply product
costs. The value you select here is defaulted when you define item costs. The
activity default basis will override the subelement default basis as long as
the basis is valid for the cost element.
Activity: Used
to apply activity costs to items. The activity basis type can only be used with
the material overhead subelement. The item cost is calculated by multiplying
the activity cost by the ratio of the number of times the activity occurs,
divided into the cumulative quantity of the item associated with those
occurrences.
Item: Used
to earn and apply costs for all subelements. For material and material overhead
subelements, you charge a fixed amount per item. For resource, outside
processing, and overhead subelements, you charge a fixed amount per item moved
in an operation.
Lot: Used
to earn and apply costs for all subelements. The item cost is calculated the
same as an Item basis cost, except the unit cost is divided by the cost type
lot size to derive the cost per item.
Optionally,
select a date to inactivate the activity.
An inactive
activity cannot be assigned as a default activity when defining material
subelements, resources, or overhead. An inactive activity also cannot be
associated with any resource when defining a routing, with a material overhead
subelement when defining material overhead defaults, or with any subelement
when defining item costs, even if the activity is the default activity for the
subelement.
An
inactive activity, however, can still be used when defining item costs. (This
applies for a new item if the inactive activity was previously specified for a
material subelement as material overhead defaults were defined.) Also,
previously defined subelements referencing an inactive activity can still be
used.
Enter
the Activity Measure (allocation basis or cost driver)
for your activity. For example, if the activity is allocating purchasing costs,
the activity measure might be the number of purchase orders generated during a
given period.
Choose
the Activity Costs button and select a cost type to associate with your
activity. Each activity can be associated with any number of cost types and
each cost type and activity combination can have a different cost.
Enter
the total cost budgeted for the activity cost pool.
This is the total activity cost you expect to incur during a specified time.
The
system calculates the cost per occurrence by dividing the total cost by the
total occurrences. This cost is used when you use a basis type activity for the
material overhead subelement.
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