Cost Elements are defined by the Unanet Administrator in Admin Setup > Accounting > Cost Elements. Cost Elements are a way to group costs into buckets of expenses, and are classified in three categories: Labor, Other Direct Costs, and Indirect Costs (calculated based on indirect rates).
Mapping to general ledger accounts (optionally used in conjunction with Posting Groups setup) can be done by clicking on the page icon next to the Cost Element line item. If an account mapping exists for the Cost Element, it is indicated by the edit pencil icon on the page icon. Otherwise, a white plus sign is displayed on the page icon.
Cost Pool Groups
Cost Pool Groups can be set up by Unanet Financials users if they want Unanet to calculate the indirect cost rates based on actual activity in the Unanet General Ledger. In most cases there will be one Cost Pool Group per legal entity. In rare cases, where a legal entity's cost pools are unusually complex, multiple Cost Pool Groups per legal entity may be needed to simplify the Cost Element or Cost Structure setup. An example where you might want to do this would be where there are five (5) different entities within a single legal entity that each have their own set of indirect rates. Instead of setting up separate Cost Elements for each entity (e.g., FRINGE1-6. OVERHEAD1-5, etc.) you could set up a separate Cost Pool Group for each entity and just use the standard FRINGE, OVERHEAD, etc., Cost Elements within each Cost Pool Group.
At this time, since Unanet does not support automatic intercompany balancing entries, the ability to automatically calculate rates across companies is not available.
The Summary tab of the Cost Pool Group contains a Name, Description and the Legal Entity to which the Cost Pool Group applies.
Enter the various Cost Pools within the Cost Pool Group. There is no limit to the number of Cost Pools that you can have. The order of the list of Cost Pools is the order in which the calculations will be performed. In other words, in most cases the order would be Fringe, Overhead, and G&A.
Click the edit pencil icon to edit the Cost Pool or click +Cost Pool to add a new one.
Calculation Period - This should almost always be set to YTD unless the calculation is used as an intermediate allocation to distribute service center costs based on some factor from the current period. An example of this would be allocating facilities costs for the month based on the square footage used in the current period.
Note: Any cost pool where the Post Rate to Cost Structures check box is selected should have Calculation Period set to YTD as the indirect cost computations in Unanet are always done on a fiscal year basis (e.g., different rates by fiscal period are not supported).
Basis Calculation Method - There are four basis calculation methods:
- Actual Amount - Stored in general ledger.
- Fixed Amount - Square footage allocations, headcount. If set as a fixed amount, the Base (Denominator) Account and Organization are disabled.
- Hours - Passing hours into general ledger.
- Percent - Percentage of total. If set as a percent, the Base (Denominator) Account and Organization are disabled.
Note: Any cost pool where the Post Rate to Cost Structures check box is selected should have Basis Method set to Actual Amount as the indirect cost computations in Unanet are always calculated by multiplying the rate times the basis amount (e.g., the ability to allocate indirect costs to projects based on hours or fixed percentages is not supported).
Post to G/L - When the check box is selected, the allocated amount will be posted to the general ledger. An example of when to select this check box would be for facilities expenses. Since there is no indirect rate typically associated with facilities expenses, and it is more of an intermediate calculation which gets distributed across the departments, this will allocate the facilities expenses across other departments. The result would distribute the expenses to be shown on the financial statements and on the individual profit and loss statements of the departments. If this is not needed in the financials, then the check box is not selected. Determining whether to post to the general ledger is based upon an organization's reporting preferences.
Post Rate to Cost Structures - This will update the Actual Rate for the fiscal year of the period for which the indirect rate calculation is performed for the Cost Element in any associated Cost Structure if this check box is selected. The Cost Element to post to needs to be selected via the dropdown menu. An example of when to select this check box is to update the Fringe, Overhead, and/or G&A rates.
POOL (NUMERATOR) - The Pool is the numerator of the rate calculation and consists of expenses related to the Cost Pool. Include the account and organization that need to be included in the numerator. For example, when calculating the fringe rate, the fringe costs defined in the glossary portion of this guide would be included in the Pool.
Review the Reference Reports for Cost Pool Hierarchy in the Account and Organization Tree Views to identify which general ledger expense account and which organization to reference in the numerator.
- ACCOUNT - Identify the expense account at the parent level so that it includes all child accounts below it to be referenced in the Pool. For example, select the parent Fringe Non Labor general ledger account for the Pool Numerator so that any new Fringe Non Labor expenses accounts underneath this parent expense account is automatically be included in the numerator.
- ORGANIZATION- Identify the organization that the Cost Pool Group would be applied to.
- POST ACCOUNT - The Post Account will include the expenses in future Pool calculations by posting to the Allocation Contra account. The Allocation Contract account will carry a credit balance to offset the debit balances of the expense accounts above it. The debit side of the entry would then go to the Allocation Post Account of the Base.
General Ledger Account View
|Fringe Non Labor Expense|
|Fringe Allocation Contra||(55,000)|
|Total Fringe Non Labor Expense||0|
Journal Entry View
Overhead Fringe Expense - Allocation 35,000 Where the fringe expense has been allocated to the Overhead pool
G&A Fringe Expense - Allocation 20,000 Where the fringe expense has been allocated to the G&A pool
Fringe Allocation Contract 55,000 This distributes the Fringe Expense between Overhead and G&A
- POST ORGANIZATION - By leaving this field blank, it will default the Post Organization to the organization related to the transaction.
BASE (DENOMINATOR) - The Base defines the account/org combinations or fixed amounts necessary to determine the denominator for the rate calculation.
- ACCOUNT- This includes what expenses are included in the base. For the fringe allocation, this is typically Direct labor and Indirect labor. Again, select the parent labor expense account so that any new labor expense accounts that may be added later is automatically included in the calculation.
- ORGANIZATION - Identify the organization that the Cost Pool Group would be applied to.
- AMOUNT - The Basis Calculation Method determines whether this field is populated:
- Actual Amount - Field not applicable.
- Fixed Amount - Enter the amounts that would be used to allocate the pool (i.e. square footage, number of employees).
- Hours - Field not applicable
- Percent - The percentage values will be entered here to be split among the Post Accounts and Organizations.
- POST ACCOUNT - The Post Account will include the expenses in future Base calculations.
- POST ORGANIZATION - If this field is left blank, the Cost Pool calculation process will default the Post Organization to the organization contained in the base transaction. This field is required if the Basis Calculation Method is set to Fixed Amount or Percent as there are no base transactions from which to determine the default organization.
Unanet will generate errors if the numerator and denominator definitions result in the same Account-Organization combination existing within the same Cost Pool definition multiple times. This might happen if the user inadvertently specifies Cost Pool parent accounts and/or organizations that overlap within the Cost Pool hierarchy.
Fiscal Year definitions must be established to define indirect cost rates by year. Accounting calendars can additionally be specified to reflect accounting months or other periods rather than calendar months, and these accounting periods can be used in reporting throughout the system.
Note: Fiscal years and fiscal periods are required to use Unanet Financials.