An invoice was received for an advertising campaign linked to trade fairs. Initially, this was posted to the marketing department cost center.
You need a mechanism to include these kind of costs in the actual data on your projects. You use a distribution cycle to transfer such costs posted directly to the cost center onto the relevant projects based on logical rules you have predefined.
In complement to the postings that use a project as cost assignment during the period, there are some activities which can debit the project at period closing. Their purpose is to transfer costs that concern the project but, that were not entered directly during the initial journal entry. This can happen for example because the cost concerned many projects and the accountant entering the invoice didn't have the specific information on how to distribute the costs. With the available closing tasks, you can maintain a comprehensive analysis view and correct budget execution, tracking of all costs related to the projects.
The closing tasks to debit a project are:
- Calculating additional overhead costs (not covered in this course)
- Running allocation cycles
Allocation cycles transfer costs from a sender to a receiver based on predefined rules.
The allocation cycles that support WBS elements as receivers are the following:
- Overhead allocation
- Intercompany allocation
|Distribution||Allocate primary costs using original accounts from senders to receivers||Keep track of the original detailed postings even on receivers|
|Overhead allocation||Allocate primary and secondary costs using overhead allocation accounts from senders to receivers||Use secondary costs for the transfer, useful when the initial detail on receivers is not important|
|Intercompany allocation||Allocate from one company to another only in the leading ledger||Receive costs from other companies of the organization|