Using Profit Centers to Calculate Overhead
Profit center options within job costing are used
primarily to determine overhead costs within a job.
This utility will add an overhead ratio (Ratio) that equals the
profit center overhead (PCO) / profit center direct costs (PCDC). The
following settings must be enabled before this feature can be used:
- The Use
Profit Centers option within must be enabled.
- The Automatically
Create Profit Centers from Departments option
within must be disabled.
- The Determine Direct
Job Cost Accounts option found in must be enabled. Review Job
Costs > Direct Job Cost General Ledger Accounts for instructions
to enable this option.
Profit center costs is a total of profit center expense accounts (indirect
and direct expenses) as configured within the profit center's general
ledger settings. Review Profit
Centers > Allocating indirect Expenses to a Profit Center for instructions
to setup profit center costs.
- PCDC: The profit center direct job cost expense accounts
(Expense general ledger accounts with the Direct
Job Cost Account enabled)
- PCO: The profit center overhead job cost accounts (Expense
general ledger accounts with the Direct Job Cost
Account disabled)
- Ratio = PCO / PCDC
The overhead percentage value is populated within each stage based on
the profit center setting within the stage as shown below. Open any stage
within a job and click on the Totals tab.
The Profit
Center option must be set within the
Totals tab
of a stage. Clear the Profit Center setting
for stages that should not have an overhead
percentage applied.
Right click on the Profit Center and select
the Filter Down option as shown below:
This utility will populate the Profit Center
setting within multiple stages or jobs. Many of the options are disabled
in the example shown above since the utility was launched within an actual
job stage. Complete the following steps to filter down a Profit
Center setting within multiple jobs and stages:
Go to Job Costing > Options
and click on the Job Folders tab.
Select a job folder and click on the Edit
Defaults button.
Click on the Job Stages
tab and open a stage.
Click on the Totals tab
within a stage.
Set the Profit Center setting
to the profit center ID you wish to filter down to other jobs and
stages.
Right click on the Profit Center
entry and select Filter Down.
The same utility as shown above will open with more
options. The user must enable the Check this box
to changeā¦ option to change the
overhead percentage within any existing jobs.
Repeat these steps to globally change any other profit
center settings.
- Launch the Job Costing > Calculate Overhead
utility to set overhead percentage within the stages of a job.
- Select the jobs that are to be affected by the
overhead calculation process.
- Select the job folder group. Select the Jobs
root folder and turn the Include Subfolders
option ON to select all jobs.
- Select one of the job status options:
- All Jobs with Exception of Closed Jobs
option will select all open jobs. Note that this selection
includes jobs that are marked completed by not closed and
tentative jobs.
- Click on the Jobs with This Status
drop down to select jobs with a specific status.
- Select the Set
Folder Defaults option to set the
overhead percentage within the default stages. This option
does not affect any existing jobs. Review the Getting
Started > Setting Job Defaults section for details
regarding job defaults. The user will need to run this utility
twice to set overhead percentage within both existing jobs
and the job defaults. Review
the Changing the Job
Status for details on the job status options.
- Enter a Range of job IDs. Enter an identical job ID in both range fields
to change all the stages within a specific job. Click
Next to open the next page of the utility as shown below:
- Select the Calculate percentage from profit
center option to complete the following calculations within
the Totals tab
of each stage within the specified job criteria:
Percent of Cost ratio = indirect costs for the
Profit Center / direct costs for the Profit Center.
- The indirect costs equals the total of all general ledger
expense accounts that are identified as indirect job cost
accounts for a specified period of time. Review the Job
Costs > Direct Job Cost General Ledger Accounts section
for instructions on the direct job cost account setting.
- The direct costs equals the total of
all general ledger expense accounts that are identified as Direct
job cost accounts for a specified
period of time. The Direct Job cost account
setting can be found in the Advanced tab of an expense general ledger account.
- The ratio is derived from the peroid of time set within Job Costing > Options.
Set the Average
overhead period setting in months.
This setting should be a substantial period of time that reflects
the overhead ratio for the profit center.
The overhead percentage calculated from the ratio
described above is copied into the Percent
of Cost based on the Profit
Center setting. View the Totals tab of
any stage within a job that was processed within the parameters indicated
on the first page of the utility.
Review the Adding a Percentage Overhead section
to se the Percent
of Cost value based on a fixed percentage.