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Controlling 1iBaan ERP 5.0c
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iBaan ERP Course Objective I
TheThe objective of this course is to objective of this course is to
learlearn about the concepts and functionality of n about the concepts and functionality of Multi Dimension Budgeting and Cost Multi Dimension Budgeting and Cost Allocations (Single Dimension Allocations (Single Dimension
Budgeting) within iBaan ERP Finance. Budgeting) within iBaan ERP Finance.
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iBaan ERP Course Objective PEG/Support
TheThe objective of this course is to objective of this course is to
learlearn about the concepts and functionality of n about the concepts and functionality of (Multi Dimension Budgeting and) Single (Multi Dimension Budgeting and) Single
Dimension Budgeting within iBaan ERP Dimension Budgeting within iBaan ERP Finance.Finance.
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Central InvoicingCentral Invoicing
ProjectsProjects
ServiceService
Quality ManagementQuality ManagementManufacturingManufacturing
WarehousingWarehousing
General Ledger
Order ManagementOrder Management
Accounts Receivable
Budgets
Cost AccountingFinancial Statements
Fixed Assets
Cash Management
iBaan ERP Finance
Purpose: To control and plan the business activities in a financial way.
• Budgets• Iteration• Operation Rates and Surcharges• Deviations
Accounts Payable
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FBS/CAT in relation to iBaan ERP
Finance
ACRACR
FAMFAM
Service
TSTSTSTS
Project
TSTSTSTS
Basic Data
IBDIBD
EMMEMM
COMCOM
MCSMCS
Central InvoicingLogistics IBDIBDIBDIBDTDTD
IBDIBDIIIBDIBDIBDIBD
TSTS
TPTP
GLDGLD
TITI
SLISLI
FSTFST
ACPACP
CATCAT
FBSFBS
WHWH
CMGCMG
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Cost accounting Background
1970s: Kilger and Plaut developed highly structured and detailed approach to cost control:– through standard costs and flexible budgets– basic principles:
• cost centers are focal point for cost planning, cost control, and production costing
• clear distinction between fixed and variable costs
U.S. cost systems similar to these cost systems
1980s: – use of computers makes it possible to create more frequent reports
displaying direct/indirect costs– activity based costing
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Cost accounting What is it?
Process of determining cost of producing goods and services:– manufactured goods:
• allocate direct labor and materials to cost of product• allocate overhead based on actual usage of overhead expenses
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Analyze performance of cost centers
Set direct and accurate CP rates
Improve allocation of indirect costs
Analyze profitability and product mix
Produce Management Income Statements
Break Costs into Fixed and Variable Components
Translate Business Plans into Flexible Budgets
Cost AccountingWhy?
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The business process
Create annual plans and budgets
Periodically compare budget (what I expect to do) vs allowed costs (what would it cost at standard) vs actual (what actually happened and what it actually cost)
After results possible to readjust our standard to more appropriate amounts
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ManufacturingPlan
ManufacturingPlan
Capacitycheck
Capacitycheck
ProductionPlan
ProductionPlan
SalesPlan
Sales by:Customer groupSales regionProduct group
Disaggregation
through Product Fam.
to ProductsHoursManMachineMaterial
Concept - planning cycle
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BudgetBudgetProductionPlan
ProductionPlan
Operation rate/surcharges
Operation rate/surcharges
Cost priceperitem
Cost priceperitem
Fixedtransfer
price
Fixedtransfer
priceStockvaluation
Stockvaluation
ActualActualRouting
BOMProfit
marginsProfit
margins
Evaluation
FixedandVariable
Concept - planning cycle
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BudgetBudgetProductionPlan
ProductionPlan
Operation rate/surcharges
Operation rate/surcharges
Cost priceperitem
Cost priceperitem
Fixedtransfer
price
Fixedtransfer
priceStockvaluation
Stockvaluation
ActualActualRouting
BOMProfit
marginsProfit
margins
Evaluation
FixedandVariable
Concept - planning cycle
Manufacturing
Finance
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Budget types
Multi dimension budget– Budget amounts can be based on several cost types (one ledger
account and/or one or more dimensions) together– Not performance driven– Baan IV functionality
Single dimension budget– Performance driven budgets that are only based on ONE
dimension at the time– Usage of CAT module for allocation and iteration– Integrating surcharges/rates
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Ledger Account Dimension
Dimension Types
(1) (2) (3) (4) (5)DimensionDimensionDimensionDimensionA.
B.
E.
D.
C.
Ledger Account
Ledger Account
Dimension
Ledger Account Dimension Dimension
Dimension
Dimension Dimension
Examples:
Multi dimension budget
Defined in a horizontal way:
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Dimension
Ledger Account Ledger Account Ledger Account
Reference Unit (cost driver)
Ledger AccountLedger Account
Reference Unit (cost driver)
Single dimension budget
Defined in a vertical way:
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FBS/CAT functionalities
Cost Center Budgeting– Multi Dimension – Cost Allocation (Single Dimension)
Product Costing
Activity-based Costing
Energy
Accounting Dep.
Production Dep.
Warehouse Dep.
Energy Production Dep.
Warehouse Dep.
Product A
Product B
EnergyProduction Dep.
Warehouse Dep.
Cutting
Assembling
Issuing
Receiving
Product A
Product B
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Multi Dimension Budgeting
Depreciation expenses
Travel expenses
Ledger Accounts Budget
1500
1000
Actual
1400
1350
145500
150600
300800
100
DimensionLocation
AmsterdamRotterdam
Rotterdam
AmsterdamMunchenNew YorkRotterdam
750
75150
01000
100
7550
10075
Amsterdam
New YorkMunchen
Rotterdam
0250
200505
DimensionDepartment
WRH
PUR
SLS
FIN
PUR
SLS
1100
100
150
150
150
850
1000
100
225
75
145
1205
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Set up master dataMulti Dimension Budgeting
Distribution codes– Used for distributing the year amounts among the periods– Factors or percentages based– Multiplier for copying budgets
Budget code– Budget method– Parent budget– Budget currency
Budget Amounts
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Distribution codes
Used for distributing the year amounts among the periods
Factor or percentage
Multiplier is used for copying budgets
Quaterly distribution
Quarter 1 15 1,00Quarter 2 25 1,05Quarter 3 40 1,10Quarter 4 20 0,95
Multiplier%Quaterly distribution
Quarter 1 1 1,00Quarter 2 3 1,05Quarter 3 4 1,10Quarter 4 2 0,95
MultiplierFactor
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Budget methods
Bottom-up– Budgets can only be defined on sublevel 0 ledger account and/or
dimension– Higher sublevels are build up automatically
Top-down– Budgets can be defined on sublevel 0 or on higher sublevels– No check on consistency between sublevels
Budget method applies for ledger accounts as well as dimensions
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32
1
0
2
1 1 1
0 0 0 00 0
Bottom-up Budget method
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3
2
1
0
Top-down Budget method
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¥
Company level
Branchlevel
Department level
Sales
Europe
Sales
America
Sales
Asia
$
$
£ $
Parent budgets
€
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Budget Distribution
Budget Codes
Budget data
Question 1-3Exercises
1-5
Skill Objectives
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Budget
Actual
Pat Year
New Budget Year
Current yearBudget
Actual
Estimate
Latest Estimate
Budget Simulation
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Budget comparisonExercises
6-9
Skill Objectives
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Cost AllocationSingle Dimension Budgeting
Dimension: Cost Centers
Accounting Department
Production Department
Sales Department
Warehouse Department
Purchase Department
MainCost Centers
100 m
1.100 m
100 m
650 m
50 m
2.000 m
Energy
PrimaryCost Center
Expen
ses J
anua
ry:
$ 1
0.00
0
$ 500
$ 5.500
$ 500
$ 3.250
$ 250
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Cost Allocation
Dimension: Cost Centers
Accounting Department
Production Department
Sales Department
Warehouse Department
Purchase Department
MainCost Centers
100 m
1.100 m
100 m
650 m
50 m
2.000 m
Energy
PrimaryCost Center
Expen
ses J
anua
ry:
$ 1
0.00
0
$ 500
$ 5.500
$ 500
$ 3.250
$ 250
Performance Quantity
Total BudgetAmount
Budget Rate /
Surcharge
5
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FBS versus CATCost Allocation
CAT
Allocation Relations
ImportActual
RetrogradeCalculation
Price Iteration
FBS
AllocationResults
BudgetDistribution
BudgetCode
ReferenceUnits
Hierarchies
ReportStructures
LARelations
BudgetDefaults
PerformanceBudget
Single Dim.Budget
Integrate Results
GLD
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Set up master dataCost Allocation
Distribution codes
Budget code
Reference Units
Performance Budget
Single Dimension Budget
Secondary ledger accounts
Allocation Relations
Hierarchies
Report Structure
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Reference unit
Reference Unit = Cost Driver or Surcharge Base
Cost driver • Machine HoursMachine Hours for an assembly department• Man HoursMan Hours for a maintenance department• Kilowatt HoursKilowatt Hours for an energy cost center• Square MetersSquare Meters for a facility cost center
Cost driver • Machine HoursMachine Hours for an assembly department• Man HoursMan Hours for a maintenance department• Kilowatt HoursKilowatt Hours for an energy cost center• Square MetersSquare Meters for a facility cost center
Surcharge base• Direct material costsDirect material costs for a warehouse departmentSurcharge base• Direct material costsDirect material costs for a warehouse department
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Reference unitProgressive planning
Total performance of source allocation relation is checked against budgeted performance quantity while defining allocation relations
Direct maintenance of performance quantity not possible
Limited capacity
Forward planning
CC1CC1
CC4CC4
CC3CC3
CC2CC2
Performance Quantity = 100
Allocation q 30Allocation q 45
Allocation q 25
Target Cost
Centers
Source Cost Center
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Reference unitRetrograde planning
Performances defined in allocation relations used to determine performance of reference unit as source for allocation relation
Unlimited capacity
Backward planning
CC1CC1
CC4CC4
CC3CC3
CC2CC2
Target Cost
Centers
Allocation q 25
Allocation q 15
Allocation q 5
Performance Quantity = 45
Source Cost Center
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Reference unitRetrograde planning
Raw material A
Raw material B
Weld material A Scrap 10%
Cut material B Waste 5%
AssemblingLoss 20%
Steel (0,9m)
Fabric (0,95m)
Chair
€ 25,00
€ 20,00
€ 45,00€ 56,25
€ 22,50
€ 19,00
Cost of 1 item
1m steel plate = € 251m fabric = € 201m steel plate = € 251m fabric = € 20
How much steel and fabric is needed for 100 approved chairs?
100q/80*100=125q assembled
(125q*0,95m)/95*100= 125m fabric
(125q*0,9m)/90*100= 125m steel
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Performance Budget
What is the available total quantity of the Reference Unit?
Machine 1.500 machine hours
Maintenance 2.000 man hours
Housing 15.000 square meters
Machine 1.500 machine hours
Maintenance 2.000 man hours
Housing 15.000 square meters
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Single Dimension Budget
What is the budget amount and rate/surcharge for the dimension/reference unit?
Maintenance
Cost Center
LA Wages
LA Temporary labor
LA Interest
€ 200.000
€ 100.000
€ 10.000
Budget Amount Rate
€10
€ 5
€ 0,50
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Effective rates and surcharges
Political rates, based on experienced external/internal (market) policies
Based on the budgeted rates/surcharges
Can be updated manually
Maintenance
Cost Center
LA Wages
LA Temporary labor
LA Interest
€ 200.000
€ 100.000
€ 10.000
Budget Amount Rate
€10
€ 5
€ 0,50
Eff. Rate
€8
€ 6
€ 0,50
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Secondary ledger account
Pri
mar
y le
dge
r ac
coun
ts
Maintenance
Cost Center
LA Wages
LA Temporary labor
LA Interest
€ 200.000
€ 110.000
€ 10.000
LA Allocate To (credit)
€ 0
€ 320.000
Assembly
Cost Center
LA Allocate From (debit) € 240.000
Warehouse
LA Allocate From (debit) € 80.000
Secondary ledger accounts
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Allocation Relations
Maintenance
SourceCost Center
Assembly
TargetCost Center
Warehouse
2.000 mh
1.500 mh
500 mh
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Retrograde calculation
Used to recalculate performance quantities of retrograde reference units
After recalculation: final capacity
Now possible to calculate operation rate
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Price iteration 1
Iterative calculation of reference unit rate gives very good approximation of rate in case of reciprocal allocation relations
Deviation of rates; e.g. 1.00– If the differences of allocation rates are decreased to <1.00 price
iteration ends
Number of cycles; e.g. 8– After 8 iteration cycles the iteration process ends
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1
2
3
4
5
6
7
8
Iteration Cycles
Max. 99 cycles
Price iteration 2
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Reference Units
Performance Budget
Single Dimension Budget
Allocation Relations
Exercises10-19
Skill Objectives
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Hierarchy of general ledger accounts and dimensions according to GL master data
NewNew Hierarchy of general ledger accounts and dimensions according to FBS master data
Hierarchies
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Report Structure
To enable the user to define his own report structure
Columns and names are fixed
Rows based on ledger accounts
Possibility to vary with multiple hierarchies
Summation lines can be inserted
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Hierarchies
Report Structure
Integrated allocation results with GLD
Exercises20-26
Optional27-34
Skill Objectives
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