COST CENTRE MANAGEMENT Course Assignment REVISION 13

COST CENTRE MANAGEMENT Course Assignment REVISION 13

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Cost Centre Management Add A Cost Centre Create Accounts for the Cost Centre Add Budgets for the Cost Centre Inquire on Account Budgets and Actual Costs. Add a Service Requisition. Release the Requisition Cost Centre Management Reports

INTRODUCTION On completion of this course the students will understand the process of adding cost centres and accounts. They will know how to do a drill down on actual costs and create and maintain budgets for divisions and cost centres. OBJECTIVES : You will learn how to: EXERCISE 1 : Add a Cost Centre EXERCISE 2 : Create accounts for a Cost Centre EXERCISE 3 : Add budgets for a Cost Centre/Division EXERCISE 4 : Add a Service Requisition EXERCISE 5 : Release the Requisition EXERCISE 6 : Inquire into Accounts Actual Detailed Journal Entries EXERCISE 7 : Cost Centre Management Report Revision 13 : 26 July 2005 Page 4

EXERCISE 1 ADD A COST CENTRE Use the Cost Centre function to add an indirect cost centre. Cost Centres directly contributing to product cost are usually direct cost centres while staff functions like the personnel department are usually indirect cost centres. On Direct Cost Centres, the Cost Centre hourly rate and the accounts that need to be credited with work performed needs to be specified. This applies to production and project (node) work. Cost centres within Cost Centres is possible in the system (Cost Centre Structure). A Cost Centre must always reside under a Division. FIGURE 1.1 ADDING A INDIRECT COST CENTRE Make yourself the Cost Centre Manager. Ask your presenter for a division code. Follow the steps in Figure 1.1 to add an indirect cost centre. Revision 13 : 26 July 2005 Page 5

EXERCISE 2 CREATE ACCOUNTS FOR A COST CENTRE Use the Accounts function to create accounts for the cost centre that you added in Exercise 1. Use the account codes in Table 2.1 below. Accounts are created from the generic charter of accounts (account codes) defined using the account codes function. FIGURE 2.1 GO TO ACCOUNT MAINTENANCE Make one of your classmates the account responsible person This is the person primarily responsible for all activities concerning the account. If a person is not entered the Division or Cost Centre Manager is the responsible person. Make sure that accounts exist for the cost centre (see General Ledger Course Exercise 1 and 2). Follow steps in Figures 2.1 to create the accounts. Revision 13 : 26 July 2005 Page 6

EXERCISE 3 ADD BUDGETS FOR A COST CENTRE/DIVISION Budgets can be entered per Cost Centre and Division. The approved budgets can be frozen and opened by the Division Manager for updates by the relevant managers. This applies to current financial year and next financial year budgets. A Complete drill down to detail transaction level on actual costs is provided for. Use the Account Budgets Actuals function to add budgets for the cost centre added. NOTE: FIGURE 3.1 SELECT VIEWING OPTIONS Follow the steps in Figure 3.1 to view the income statement accounts for cost centre CC22. The Latest = Actual button makes the latest budget equal to the actual cost. To budget for the next financial year, select the next financial year on this screen. To view only certain accounts use the exclude / include functionality. FIGURE 3.2 ENTER BUDGETS NOTE: Follow the steps in Figure 3.2 to add budgets for a cost centre. Approved Budgets is the baseline budget that can be frozen by the division manager. See View Approved Checkbox. Also note the Stop at current period button. Step 1: The motivation for a budgetary figure can be added behind the cell using the note button. Revision 13 : 26 July 2005 Page 7

EXERCISE 4 ADD A SERVICE REQUISITION Use the Requisition function to add a Service requisition. The reason for adding a requisition at this stage, is to generate an actual amount be able to inquire on it. To get a detail understanding of requisitions view the requisition course material. FIGURE 4.1 ENTER REQUISITION HEADER DATA Enter the services account number for your own cost centre. Make the Requisition value smaller or equal to the amount you specified on your budget for the applicable account for your cost centre. Follow the steps in Figure 4.1 to add the Requisition Header. FIGURE 4.2 ENTER SERVICE REQUISITION DATA NOTE: Follow the steps in Figure 4.2 to add the service requisition data. Step 4: If unchecked, the resulting invoice does not have to be approved. FIGURE 4.3 SEND FOR APPROVAL The cost centre manager s name will automatically appear in the Send To combo box. Follow the step in Figure 4.3 to send the service requisition for approval. Revision 13 : 26 July 2005 Page 8

EXERCISE 5 RELEASE THE REQUISITION Use the Requisition function to release the requisition sent to you for final approval. (If you are the cost centre manager or account responsible person). FIGURE 5.1 READ MAIL Read your mail requesting approval of the requisition. Send the requisition to your presenter for implementation. Your presenter will do the creditors function which will insert an actual amount for your requisition. Follow the steps in Figure 5.1 to read the electronic mail. FIGURE 5.2 GO TO THE APPROVAL TAB NOTE: After you have clicked on the Go To Related button, the Requisition function will open automatically with the relevant requisition number. Follow the steps in Figure 5.2 to go to release the requisition. Revision 13 : 26 July 2005 Page 9

EXERCISE 6 INQUIRE INTO ACCOUNTS ACTUAL DETAILED JOURNAL ENTRIES Use the Account Budgets Actuals function to inquire on the actual amounts created against the budget. This function is also used to do a drill down up to general ledger level. FIGURE 6.1 SELECT VIEW OPTIONS Follow the steps in figure 6.1 to figure 6.2. Select the account against which the service requisition is requested. FIGURE 6.2 SELECT ACTUAL AMOUNT Revision 13 : 26 July 2005 Page 10

FIGURE 6.3 SELECT JOURNAL FIGURE 6.4 VIEW JOURNALS Revision 13 : 26 July 2005 Page 11

EXERCISE 7 COST CENTRE MANAGEMENT REPORT Use the General Ledger Reports function to run a Cost Centre Management Report. FIGURE7.1 SELECT VIEW OPTIONS Follow the steps in figure 7.1 to figure 7.2. FIGURE 7.2 Revision 13 : 26 July 2005 Page 12

LESSON SUMMARY On completion of the course the students will understand the process of adding cost centres and cost centre accounts. They will know how to drill down on actual costs as well as create and maintain budgets. TO Add a Cost Centre. Create Accounts for a Cost Centre. Add Budgets for Cost Centres / Divisions. DO THIS Use the COST CENTRE function. Use the STATIC DATA tab to enter data. Use the ACCOUNTS function. Use the ACCOUNT MAINTENANCE tab to link accounts to cost centres. Use the ACCOUNT BUDGETS / ACTUALS function. Use the VIEWING OPTIONS tab to add the argument. Use the BUDGET / LATEST / ACTUAL to add budgets. Requisition to be added will be covered under the Requisition course material. Inquire into Accounts Actual Detailed Journal Entries. Use the ACCOUNT BUDGETS / ACTUALS function. Use the VIEWING OPTIONS tab to add the argument. Use the BUDGET / LATEST / ACTUAL tab to view expenditure. Use the DETAIL JOURNAL ENTRIES tab to view the journal entry. Use the JOURNAL SOURCE tab to view all the detail of the transaction. Run a Cost Centre Management Report Use the General Ledger Reports function. Revision 13 : 26 July 2005 Page 13