The Internal Costing functionality of CGI Advantage is built to track various types of costs, which may eventually be charged to accounting distributions. Many of the Internal Costing scenarios are related to Cost Accounting (e.g. the costs may be charged to various construction programs), but there is no requirement to use Cost Accounting chart of accounts with Internal Costing.
The following scenarios are examples where Internal Costing would be used:
An employee works on maintenance task orders. The employee’s time should be charged to those task orders at a fixed rate based on hours worked. The employee’s billing rate is not the same as her payroll costs, which should remain undisturbed as expenditures to her home accounting distribution.
A piece of equipment is used on various construction projects. The equipment was purchased by an equipment group (with its own home accounting distribution). All maintenance costs and depreciation are also charged to the equipment group. When the equipment is used for projects, the benefiting projects are charged a cost based on units of usage (hours, days, etc.) and the equipment group is credited revenue for the same amount.
A lab performs testing of materials samples. Tests performed by the lab are charged to various accounting distributions. For some types of testing, the lab books revenue and for other testing no revenue is posted.
Internal Costing provides a means for these costs to be charged directly to user specified accounting distributions. Users specify usage; the system then calculates the associated costs and generates the appropriate accounting entries. This information is collected through the Internal Costing Usage Transaction that updates the Internal Costing Journal as later input to the Internal Costing system process that generates transactions to record any accounting impacts of the usage.
The accounting generated by the Internal Costing system process may eventually be billed as part of normal Cost Accounting Reimbursement. Returning to the example of billed equipment, the Internal Costing system process will generate revenue for the equipment owner and charge the project that used the equipment. The construction project that was charged for equipment use, can then bill those usage costs along with other costs posted to the project for reimbursement from one or more funding sources for that project. The Cost Accounting User Guide should be consulted for details on this type of reimbursement.
In some cases, usage may be recorded for reporting purposes only; costing is not a required step in the process. One example of this would be the use of Internal Costing to record statistical units of measure that will be analyzed for Activity Based Costing. In this scenario, statistical units would be posted as usage entries that have a zero-dollar rate.