Cost Codes

Use the Cost Codes command to maintain cost code records that hold information about the types of cost and revenue transactions you will process within the Costing application. For example, you can set up codes for labour, materials, sales, and so on. The cost type governs the type of transaction you can record against this code. For example, you cannot record a revenue against an expense type code, or record timesheet details against a stock type code, and so on. For additional analysis, where you are using the appropriate applications, you can also assign cost codes to the following:

Sales Ledger sales codes
Purchase Ledger supply codes
Stock Control stock codes.

You use the Cost Rates command on the Action menu associated with the Cost Codes form to assign rates per unit. These can carry either a fixed or percentage overhead recovery value. If you have entered cost rate descriptions, you can also enter a value for each rate code. Some information is specific to the type of cost code specified; for example, labour codes can have payroll transfer details associated with them.

If you have the Costing application integrated with the Stock application, you can create cost codes for each item in a selected range using the Stock Cost Codes command on the Utilities menu.

You can create new cost code records on the basis of existing ones. Any existing cost code record can be selected as a model for a new record; you then amend the details required for the new record.

Whether you can add new cost code records created using this facility to existing jobs will depend on the setting of the Allow Cost Code Additions option on the Set Options form.

Cost Types

Cost types govern the type of transaction you can record against this code and you can select one of the following from a list:

Stock (for recording the cost of items issued from stock against jobs).
Labour (for recording employee costs against jobs).
Narrative (for comments not affecting the cost or profit of the job but which may be included on invoice documents).
Direct Expense (for expenses incurred on jobs that are perhaps not usually recharged to the client).

Note: These expenses will still be displayed when revenues are posted from the Costing - Processing - Revenues form if the Invoice Method is set to 'Invoice Costs by Total Cost', 'Invoice Costs by Each Line', 'Invoice Costs by Code, 'Invoice Costs by Type, or 'Invoice Costs by Framework'.

However, if the expenses will not be recharged to the customer, they can be marked as accounted for by using the Costing - Processing - Matching form before posting a revenue transaction.

Recharge Expense (for expenses incurred on jobs that are recharged to the client and therefore included on job invoices).
Contractor (for recording subcontractor-related costs against jobs).
Overhead (for recording overhead costs against jobs).
Interim Billing (for recording interim invoices during the life of a job).
Final Billing (for recording the final invoice when the job is done).
Retention (for recording revenue withheld by the client until certain phases, or the whole job, is completed).
Write Up/Off (for recording costs written off against jobs such as damaged materials, or additional mark-ups).

Sales and Purchase Codes

If the Sales and Purchase applications are integrated with the Costing application, you can optionally enter default sales and purchase analysis codes so that any costs posted to this cost code are analysed in the sales or purchase ledgers. You would typically enter a purchase code for costs and a sales code for revenues. Sales codes entered on costs can be passed to the sales ledger when that code is invoiced. Integration between the Costing application and the Sales and Purchase applications is controlled by the setting of the Purchase Ledger to Costing and Sales Ledger to Costing options on the Options tab of the Company Profiles form in the System application.

Stock References

If the Stock Control application is integrated with Costing, you can associate a stock reference with a stock type cost code using the Stock Reference box.

If you enter a stock code in the Stock Reference box, you can use it only for that stock item when you analyse an issue or return to a job.
If you leave Stock Reference box blank, you can analyse an issue or return of any stock item against the cost code.

You can also enter an extension in the rates table linked to a cost code - to use either the cost or selling price from the stock item. If you do, the stock item’s profile must have the same factor quantity or decimal places as the cost code. If you leave the extension blank, and the factor or decimal places are not the same, only the value of the issue is posted to the Costing application.

Tip:You can generate cost codes for all or ranges of stock items using the Costing - Utilities - Stock Cost Codes command.

Integration between Costing and the Stock Control application is controlled by the Stock Control to Costing option on the System Manager - Maintenance - Company Profiles form.

Global Cost Code Changes

A Global Cost Codes command is provided on the Utilities submenu which you can use to update the cost per unit or overhead details for a range of cost code records. For example, if your overhead costs increase, you might want to reflect that on all existing cost code records and this wizard helps you achieve that in one simple process.

Payroll Transfer

If the Costing application is integrated with the Payroll application, there are three pieces of information relevant to labour type cost codes. The first concerns what is transferred when you use the Payroll Transfer command on the Utilities menu. You can choose between values (the labour cost) or time units (hours and minutes or hours and decimal fractions). The second is the pay element to be used for each cost rate record associated with the cost code. The third, also associated with the cost rate, is the 'extension' that yields the cost value by multiplying units by the rate. In this instance, you can choose between the cost per unit as defined within the Costing application, or the unit rate defined within the Payroll application. Integration between the Costing application and the Payroll application is controlled by the setting of the Costing to Payroll option on the Options tab of the Company Profiles form in the System application.

Prerequisites

The following must be defined in the appropriate application before you can complete the corresponding boxes:

Box	Prerequisite
Cost Rate	At least one cost rate description must be defined using the Cost Rates descriptions on the Maintenance menu.
Sales Code	If the Sales application is integrated with the Costing application, at least one sales code record must be created using the Sales Codes command on the Maintenance submenu of the Sales application before you can associate a sales code with the cost code.
Supply Code	If the Purchase application is integrated with the Costing application, at least one supply code record must be created using the Supply Codes command on the Maintenance submenu of the Purchase application before you can associate a supply code with the cost code.
Stock Reference	If the Stock application is integrated with the Costing application, at least one stock item must be created using the Processing command in the Stock application before you can associate a stock item with a cost code.
Employee	If the Costing application is integrated with the Payroll application, at least one employee record using the Processing command in the Payroll application before you can identify an employee code for labour type cost codes.
PAY	If the Costing application is integrated with the Payroll application, at least one payment type must be created using the Payment Profile command on the Maintenance submenu of the Payroll application before you can link a payment element to a cost rate associated with a labour type cost code.
Model Cost Code	If you are creating a new cost code record on the basis of a model, the model cost code record must be defined beforehand.

Cost Code Entries

Cost Codes - General

Box	Description
Description	A description of the cost code of up to 40 characters.
Costing Type	An option that determines the costing type. Other entries on the form are dependent on the type you select from the list. You can choose one of the following: Stock (Cost), Labour (Cost), Narrative, Direct Expense (Cost), Recharge Expense (Cost), Contractor (Cost), Overhead (Cost), Interim Billing (Revenue), Final Billing (Revenue), Retention (Revenue) and Write Up/Off.
Sales Code	A reference that identifies the sales code. This does not apply to 'Narrative' type cost codes. If your Sales application is integrated with the Costing application, you can select a sales code from a list. Otherwise, you can type any code of up to 8 characters.
Purchase Code	A reference that identifies the supply or purchase code. This does not apply to 'Narrative' type cost codes. If your Purchase application is integrated with the Costing application, you can select a supply code from a list. Otherwise, you can type any code of up to 8 characters.
Stock Reference	A reference that identifies the stock item. This only applies to 'Stock' type cost codes. If your Stock application is integrated with the Costing application, you can select a stock item from a list. Otherwise, you can type any code of up to 16 characters.
Factor	If this cost code is factored, enter the quantity per factored item. Factoring is used where an item is stored in multiples but may be split when issued for use on jobs. For example, a pallet of 25 blocks would have a factor of 25, and if only 8 are to be used on a job, the quantity is entered as 0/8, or if 31 blocks are used, the quantity would be entered as 1/6 (meaning one pallet of 25 blocks plus 6 individual blocks). The application calculates costs by dividing the factor by the units used. For labour types where the hours option is set to hours and minutes, the factor defaults to 60.
Decimals	The number of decimal places in which you want to hold quantities for the cost code. This defaults to 0 (which implies integers only).
Unit Description	The description for whole units for this cost code. This might be helpful for factored items to identify the name of the unit, such as '12 Pack'. For labour type codes, this displays the unit type according to your setting of the Hours and Minutes option on the Set Options form and will show whether units will be hours and minutes or hours and decimal fractions.
Quantity	The default 'issue' quantity for the cost code. For example, this might be the minimum quantity you deal in for a particular cost. Some companies charge labour at an hourly rate but only invoice in multiples of a half-day. In this case, the quantity might be four (hours). This is the default quantity offered automatically when you enter this code on transactions, but you can override it.
Payroll Transfer	An option that determines what details are to be transferred to the payroll when you use the Payroll Transfer command on the Utilities menu. This only applies if the Costing application is integrated with the Payroll application. You can choose 'Value', 'Hrs/Min' or 'Hrs/Dec' from a list, depending on the setting of the equivalent option within the Payroll application.
Employee	A reference that identifies the employee whose payroll rate details will be used to create a budget in jobs or estimates. This only applies if the Costing application is integrated with the Payroll application.

Rate Details for Cost Code

Box	Description
Cost/Unit	The cost per unit for the cost rate.
PAY	If the Costing application is integrated with the Payroll application, select the reference that identifies the payroll payment profile from a list. This identifies the pay type to which the cost code rate will be transferred when you use the Payroll Transfer command on the Utilities menu.
EXT	The 'extension' that yields the cost value by multiplying units by the rate. You can select one of the following from a list: Cost/Unit (for the cost code cost per unit), Payroll (for labour types only, use the pay rate associated with the profile identified in the PAY list box), Selling Price (for stock types, use the selling price from the stock issue transaction), and Cost Price (for stock types, use the cost price from the stock issue transaction). Issue transaction prices depend on stock profile settings. See also Defining Stock Profiles.
Overhead/Markup	The value of any overhead/markup. This overhead/markup can be used to arrive at a 'true' cost price. For example, you may pay your employees at an hourly rate of pay but incur further overheads to cover heat, light, rent of workshop and so on.
Fixed	An option that determines whether the value entered in the Overhead/Markup box is a fixed value regardless of the quantity (in which case you select the option) or a 'per unit' overhead to be multiplied by the quantity (in which case the option is cleared).
Overhead/Markup Percent	The percentage overhead/markup to be applied. If you want to specify the overhead/markup as a percentage of the unit cost instead of a value, enter the percentage in this box.