Calculation Method = None
Note: In this method, the sales price / amount that is displayed against the posted transaction, is calculated based on sales price setup. This sales price / amount is a tentative indication of what revenue could have been generated from that project transaction. But that is not the actual sales revenue, as the sales revenue in the fixed priced project is through the on-account invoicing (contract value). The entire revenue is recognized on separate 'estimate' fee category (from the project group setup), whenever the revenue recognition is run via the estimate process. System will post the general ledger voucher for the recognized revenue.
Drawbacks:
Calculation Method = Markup percent – total
Project Cost center = A
Contract Value = 100,000
Hours Forecast = 10,000
Total Cost Posted = 7,000
Cost for employee ABS which belongs to Cost Center A = 3000
Cost for employee XYZ which belongs to Cost Center B = 4000
% cost complete = 70% (7000/10,000)
Revenue to recognise = 70,000
Revenue posted to cost center A = 30,000
Revenue posted to cost center B = 40,000
Note: In this method, the sales price / amount that is displayed against the posted transaction, is calculated based on sales price setup. This sales price / amount is a tentative indication of what revenue could have beeen generated from that project transaction. But that is not the actual sales revenue, as the sales revenue in the fixed priced project is through the on-account invoicing (contract value). Whenever the estimate process is run to recognize the revenue, instead of posting the entire revenue on a fee category (as done in the 'Calculation method = None' process above), system will update the sale value on the individual project transactions posted earlier and will also create a general ledger voucher for the pro-rated recognized revenue per project transaction.
Advantages:
Sarang
Project Cost center = A
Contract Value = 100,000
Hours Forecast = 10,000
Total Cost Posted = 7,000
Cost for employee ABS which belongs to Cost Center A = 3000
Cost for employee XYZ which belongs to Cost Center B = 4000
% cost complete = 70% (7000/10,000)
Revenue to recognize = 70,000
Note: In this method, the sales price / amount that is displayed against the posted transaction, is calculated based on sales price setup. This sales price / amount is a tentative indication of what revenue could have been generated from that project transaction. But that is not the actual sales revenue, as the sales revenue in the fixed priced project is through the on-account invoicing (contract value). The entire revenue is recognized on separate 'estimate' fee category (from the project group setup), whenever the revenue recognition is run via the estimate process. System will post the general ledger voucher for the recognized revenue.
Drawbacks:
- Entire Revenue of 70,000 is posted to cost center A, as revenue posted in this method follows the dimensions of project.
- Revenue per employee is not visible at the transaction level.
Calculation Method = Markup percent – total
Project Cost center = A
Contract Value = 100,000
Hours Forecast = 10,000
Total Cost Posted = 7,000
Cost for employee ABS which belongs to Cost Center A = 3000
Cost for employee XYZ which belongs to Cost Center B = 4000
% cost complete = 70% (7000/10,000)
Revenue to recognise = 70,000
Revenue posted to cost center A = 30,000
Revenue posted to cost center B = 40,000
Note: In this method, the sales price / amount that is displayed against the posted transaction, is calculated based on sales price setup. This sales price / amount is a tentative indication of what revenue could have beeen generated from that project transaction. But that is not the actual sales revenue, as the sales revenue in the fixed priced project is through the on-account invoicing (contract value). Whenever the estimate process is run to recognize the revenue, instead of posting the entire revenue on a fee category (as done in the 'Calculation method = None' process above), system will update the sale value on the individual project transactions posted earlier and will also create a general ledger voucher for the pro-rated recognized revenue per project transaction.
- Revenue of 70,000 is posted to cost center A and B on a pro-rata basis. The revenue posted in this method follows the dimensions of individual transaction.
- Revenue per employee is visible at the transaction level.
Sarang
