[About Cost Code Selection Criteria] [Override Cost Code]
Cost Codes are used to control how cost is posted, based on a combination of; cost code rule, existing information on the work task and setup in Posting Control.
In the work task management solution, it’s possible to break down the work into different work tasks. Each work task could potentially need to be posted to different code parts to better reflect the work done. For example; one work task may have an external customer where WIP handling could be the preferred cost handling, while another work task is for internal work and should directly be posted to a cost account. A third work task could handle warranties or a service contract. With the use of cost codes, it is possible to capture several business scenarios and define how cost should be managed.
A cost code can be defined as a cost code or a WIP cost code. The defined cost codes are configured in Cost Code rules, to capture the different business scenarios where cost should be management in different ways depending on the work task information. Both cost codes and WIP cost codes, can be defined if they are to be used to override the system-retrieved cost code. This can be useful if a cost no longer can be invoiced, then a non-invoiceable cost code could be used, or perhaps a portion of cost is taken as a goodwill cost. The cost code can be overridden on the work task or for specific transactions on a work task.
It is possible to manage work in progress (WIP) handling with cost codes. This is commonly used in Service Management, where cost of ongoing work is placed on a work in progress account, until the point where the work is considered finished. At the WIP reversal point, the cost is released to the final account, for example a Cost of Sold Services account. For each cost code, it can be configured if a WIP cost code should be used. For each WIP cost code a WIP reversal point is defined, and whether the transaction date or the event date should be used, when the cost is posted to final accounts. It is possible to manually release WIP. This can be useful if cost that was expected to be invoiced, no longer is. In that situation, the cost should be released from the work in progress account, and directly be taken as a cost.
The defined cost codes and WIP cost codes are used as control type values in posting control, for control type C106 – Work Task Cost Codes. For each Posting Type, the control type can be used to defined how each cost code should be posted. When a transaction is reported, a cost code is retrieved to the work task transaction, based on the cost code rules and used when building the code string in posting control.
Example: a company wish to cost manage the following business scenarios with the use of cost codes:
| Scenario | Description |
| Scenario 1 | The consumed work and material will be sold as a service to the customer.
Work in progress will be used while the work is ongoing. A cost code SALES is defined and configured in cost code rules for work tasks with an external customer. A WIP cost code (WIP) is defined. |
| Scenario 2 | Maintenance of one of another site within the organization. Here the organization considers the particular site as an internal customer.
A cost code (INTERNAL) is defined and configured in cost code rules for Internal customer. |
| Scenario 3 | Customer warranties where money has been setoff on an account for warranties. Cost Code: CUSTWAR. |
The control type C106 - work task cost codes are setup against required posting types. The cost codes are used as control type values for control type C106 to define how a certain cost code should be posted for each code patr.
Example; Work Task Cost Code Rules:
| Scenario | Cost Code | External Customer | Internal Customer | Customer Warranty | WIP Code |
| Scenario 1 | SALES | Yes | No | No | WIP |
| Scenario 2 | INTERNAL | No | Yes | No | |
| Scenario 3 | CUSTWAR | No | Yes |
Example; Posting Control details for control type C106 defined for Posting Type: T1 Time Reporting
| Cost Code | Code Part (Account) | Code Part Description |
| SALES | 4023 | Cost Of Sold Services |
| WIP | 1400 | Work In Progress |
| INTERNAL | 5510 | Internal Maitenance Work |
| CUSTWAR | 5800 | Customer Warranties |
For more details, refer About Cost Code Selection Criteria