Function: Cost budgeting

In this function, all activities that are required to create a cost budget, performance-based budget, are carried out. A cost budget, performance-based budget, is created. Budgets are generated by dimension, for example, a cost center or an activity. Costs are allocated to other dimensions, based on the allocation relations that you defined.

This function will lead to budgeted operation rates and surcharges that can be automatically integrated into CPR and PCS. Subsequently, the cost of products can be calculated, reviewed, and updated.

Variant process: Cost budgeting (code: MCS01a)
  • The objective of this process is to support the registration and maintenance of performance-based budgets.
  • Budgets can be generated for each dimension, for example, cost center or activity. The costs can be allocated to other dimensions, based on defined allocation relations. After you calculate the operation rates and surcharges based on the budgets, you can integrate them into product cost management.

Operations included in this variant are:

  • Set up budget: copy budget, performance budget, and single dimension budget.
  • Set up allocations: allocation relations and retrograde calculation.
  • Perform iterations: price iteration, calculated rates by ledger account, integration of iteration results, and print budget cost allocation sheet.
  • Integrate Rates/Surcharges: copy budget cost rates into effective rates, effective rates by reference unit, integrate budget operation rates, and integrate budget surcharges.
  • Compare budgets
  • Cost calculation standard products: calculate cost and valuation prices, actualize or delete cost calculation, and calculate sales prices by item.

Assumptions:

  • Because the cost budget is a performance-based budget, you must use the single-dimensions budget functionality.
  • You do not use activity-based costing, therefore, you do not use consumption rules for allocation relations.

IT support:

  • LN Financials, Cost Accounting
  • LN Financials, Financial Budgeting System
Variant process: Cost budgeting, activity based costing (ABC) (code: MCS01b)

The objective of this process is to support the registration and maintenance of performance-based budgets.

You can generate budgets for each dimension, for example, cost center or activity. The costs can be allocated to other dimensions, based on defined allocation relations. After you calculate the operation rates and surcharges based on the budgets, you can integrate them into product cost management.

Operations included in this variant are:

  • Set up budget: performance budget, effective rates by reference unit, copy budget cost rates into effective rates, and single dimension budget.
  • Perform allocation and iteration: generate allocation relations with consumption rules, allocation relations, retrograde calculation, price iteration, and integration of iteration results.
  • Generate bill of activities.
  • Bill of activities.
  • Compare budgets.
  • Cost calculation standard products: calculate cost and valuation prices, actualize or delete cost calculation, and calculate sales prices by item.

Assumptions:

  • Because the cost budget is a performance-based budget, you must use the single-dimensions budget functionality.
  • You use Activity Based Costing (ABC) and, therefore, you use consumption rules for allocation relations.

IT support:

  • LN Financials, Cost Accounting
  • LN Financials, Financial Budgeting System