Issue/Symptom/Question

Are there any examples on how OH Distribution Rules can be setup?

Applies To

System Management > System Rules > Overhead Distribution Rule Information 

Resolution/Fix/Answer

Below are two detailed examples describing the overhead distribution process and its purpose.

Distributing SUT Expense

SUT premiums are payable on employee wages up to limits set by the various states. Because many employees may reach these limits relatively early in the year, the direct burden approach to charging this expense to jobs can cause jobs worked early in the year to incur a disproportionate share of the SUT cost.

Therefore, you may choose to use Overhead Distribution to distribute your SUT expense evenly over all the jobs you work during the year. To do this:

1. Estimate your total labor cost and SUT expense for the year and determine what percent the SUT expense is of the labor cost.

1. Instruct Payroll to charge SUT expense to a SUT Expense account.

1. Set up an overhead distribution “From” rule with the following characteristics:

• Apply overhead based on charges made by employees in all payroll classes.  (% sign wildcard = All)

• Limit that application only to charges made to jobs.

• Calculation Method: A percent of the labor cost (as determined earlier).

• Applied Account: SUT Expense Applied account (should be located next to the SUT Expense in your financial statements).  The applied account will be the credit or offset to move the dollars from the Overhead Expense to the Direct Costs, thus preventing double cost.

• Distribution/Allocation: You could either have PENTA add the SUT distribution onto the labor charges that are the basis for it, or you could allocate the distribution to a specific Cost Type and Costcode mask.

Distributing Tool Costs

A group of workers has exceptionally heavy tool usage. You want to mark up the labor costs charged to all jobs of a specific type of labor in your division for those workers to reflect the tool expense. You want the tool expense charged to detail 99 in whatever phase or branch the workers are charged to.

1. Set up a special Cost Type of labor to charge for labor performed by the workers with the heavy tool usage.

1. Set up an overhead distribution “To” rule with the following characteristics:

• Charge Basis – Your OU, the special labor Cost Type, and the Job Type you want to charge.

• Calculation Method – An amount per hour, reflecting your tool costs.

• Applied Account – An Applied Tool Expense account.

• Allocation – Cost Type L (or another Cost Type set aside by you for allocated expenses) and Costcode mask %99.

Field Definitions

Define From Rules tab

System Management > System Rules > Overhead Distribution Rule Information > Define From Rules tab

Use the Define From Rules tab to set up basic rule information and to specify the source of charges to which PENTA will apply the overhead distribution for a “From” rule.

Rule #

An overhead distribution Rule # uniquely identifies a specific rule and indicates the order in which PENTA applies the rule. PENTA applies rules sequentially according to their rule numbers—Rule 1 before Rule 2, Rule 2 before Rule 3, and so on.

Entry is required. No default.

Type

This field identifies the overhead distribution rule Type. Available values are:

• ACT (Actual Cost) – PENTA distributes the overhead to actual job costcodes as defined for the rule.

• BUD (Budget) – PENTA adds the overhead to costcode estimates for the job.

• TH (Both Actual and Budget) – PENTA processes both the ACT and BUD distributions.

Entry is required. This field defaults as ACT.

Description

The overhead distribution rule Description identifies what the rule number stands for.

Entry is required. No default.

Effective Date

The Effective Date tells PENTA when to begin processing the overhead distribution rule.

If you add a new Effective Date for an overhead rule, PENTA displays a message asking if you want to use the information associated with the previous effective date as a basis for the new record. If you enter Y in response, PENTA copies all the rule parameters from the previous record to the new record and allows you to change any value you want. If you enter N, PENTA creates a new blank record and you must enter all the parameters.

If you enter a new record with the same effective date as a previous record, PENTA marks the previous record with a D status so that only one record per date is active.

Multiple effective dates may exist for an overhead rule. PENTA selects the appropriate record based on the date of the transaction triggering the rule.

Entry is required. No default.

Status: (A/D)

The Status indicates whether this overhead distribution rule is active (A) or disabled (D)

Entry is required. This field defaults as A.

Distr Type

The Distribution Type identifies the charge method this rule is based on. Available values:

• B (Both) – Overhead distribution rule applies to charges made both to entities specified on the Define To Rule tab and from the sources specified in this tab’s Apply Overhead Based on Charges Made From block.

• F (From) – Overhead distribution rule applies to charges made from the sources specified in this tab’s Apply Overhead Based on Charges Made From block.

• T (To) – Overhead distribution rule applies to charges made to the entities specified on the Define To Rule tab.

Entry is required. No default.

Apply on Charges

Apply on Charges indicates whether overhead distribution occurs for inter-OU charges. Available values are:

• B (Both) – Overhead distribution applies on both charges within a Balance Sheet OU and between Balance Sheet OUs.

• N (No) – Overhead distribution applies on charges only within a Balance Sheet OU.

• Y (Yes) – Overhead distribution applies on charges only between Balance Sheet OUs.

Entry is required. This field defaults as B.

Apply Overhead Based on Charges Made From

Employees in PR Class

Overhead distribution rules can apply to charges made from a single payroll class, a group of payroll classes, or all payroll classes. Enter one of the following in the Employees in Payroll Class field:

• A Payroll Class ID –PENTA applies overhead calculations to charges originating from employees in this specific Payroll Class only.

• A mask –PENTA applies overhead calculations to charges originating from employees in Payroll Classes that correspond to the mask.

• A percentage –PENTA applies overhead calculations to charges originating from employees in all Payroll Classes.

Entry is optional. No default.

Assets in Asset Class

Overhead distribution rules can apply to charges made from a single asset class, a group of asset classes, or all asset classes. Enter one of the following in the Assets in Asset Class field:

• An Asset Class ID – PENTA applies overhead calculations to charges originating from assets in the this specific Asset Class.

• A mask – PENTA applies overhead calculations to charges originating from assets in Asset Classes that correspond to the mask.

• A percentage – PENTA applies overhead calculations to charges originating from assets in all Asset Classes.

Entry is optional. No default.

Organization Unit Id

Overhead distribution rules can apply to charges made from a single Organization Unit, a group of Organizations Units, or all Organization Units. Enter one of the following in the Organization Unit Id field:

• An Organization Unit ID – PENTA applies overhead calculations to charges originating from this specific Organization Unit.

• A mask – PENTA applies overhead calculations to charges originating from all Organization Units corresponding to the mask.

• A percentage – PENTA applies overhead calculations to charges originating from all Organization Units.

Entry is optional. No default.

‘J’obs/‘A’ccounts/‘F’ixed Assets/‘W’ork Orders

The value in this field tells PENTA what type of charges it applies the overhead distribution rule to. Available values are:

• A – Accounts

• F – Fixed Assets

• J – Jobs

• W – Work Orders

A null value indicates the overhead distribution rule applies to all charge types.

Entry is optional. No default.

Define To Rule tab

System Management > System Rules > Overhead Distribution Rule Information

Use the Define To Rule tab to limit the entities receiving charges to which PENTA will apply the overhead distribution for a “To” rule.

Rule #

This field displays the number of the overhead distribution rule from the first tab. The description associated with the rule displays beside the rule number.

You cannot edit this field; it is for display only.

Effective Date

This field displays the Effective Date from the first tab.

You cannot edit this field; it is for display only.

Apply Overhead Based on Charges Made To block

OU Id

If you enter an OU Id in this field, PENTA applies and limits the overhead distribution rule to charges made to this OU only. If you enter other limitations (Job Id, Cost Type, etc.), PENTA further limits the rule as it applies to those entities within the context of this OU. When you enter an OU Id, its name automatically appears in the adjacent field.

Entry is optional. No default.

Include Child OU Ids of OU listed above (Y/N)

The value in this field tells PENTA whether to apply the overhead rule to child OUs of the OU specified in the OU Id field. Available values are:

• N (no) – PENTA ignores the child OUs.

• Y (yes) – PENTA applies the overhead distribution rule to charges to the OU listed in the OU Id field and to all child OUs below it in the OU hierarchy.

Entry is required. This field defaults as N. This field is only accessible if you entered an OU in the previous field.

Asset Expense Cat

If you enter an Asset Expense Category in this field, PENTA applies and limits the overhead distribution rule to charges made to this Asset Expense Category only. If you enter other limitations (OU Id, etc.), PENTA further limits the rule as it applies to those entities within the context of this asset expense category. When you enter an Asset Expense Category, its name automatically appears in the adjacent field.

Entry is required. No default.

WO Service Type

If you enter a Work Order Service Type, PENTA applies and limits the overhead distribution rule to charges made to this Work Order Service Type only. If you enter other limitations (OU Id, etc.), PENTA further limits the rule as it applies to those entities within the context of this WO Service Type. When you enter a WO Service Type, its name automatically appears in the adjacent field.

Entry is required. No default.

Job Type

If you enter a Job Type in this field, PENTA applies and limits the overhead distribution rule to charges made to jobs of that type only. If you enter other limitations (OU Id, Cost Type, etc.), PENTA further limits the rule as it applies to those entities within the context of this Job Type. When you enter a Job Type, its name automatically appears in the adjacent field.

Entry is optional. No default

Job Id

If you enter a Job Id in this field, PENTA applies and limits the overhead distribution rule to charges made to that job only. If you enter other limitations (Cost Type, etc.), PENTA further limits the rule as it applies to those entities within the context of this Job Id. When you enter a Job Id, the job name automatically appears in the adjacent field.

Entry is optional. No default.

Cost Type

If you enter a Cost Type in this field, PENTA applies and limits the overhead distribution rule to charges made to this Cost Type only. If you enter other limitations (OU Id, Job Type, etc.), PENTA further limits the rule as it applies to those entities within the context of this Cost Type. When you enter a Cost Type, its name automatically appears in the adjacent field.

Entry is optional. No default.

State Code (evaluated only on labor transactions)

If you enter a State Code in this field and it matches the UC State Code associated with payroll charges, PENTA applies the overhead distribution rule to those payroll charges.

Entry is optional. No default.

Costcode Range

If you enter a Costcode Range, PENTA applies and limits the overhead distribution rule to charges made to Costcodes in the range. You must enter at least one other “To” rule limitation (OU Id, Job Type, etc.) in order to specify a Costcode Range. PENTA further limits the rule as it applies to those entities within the context of the Costcode Range.

In the Costcode Range From column, enter the lowest Costcode or Costcode mask that should have overhead rules applied to it.

In the Costcode Range To column, enter the highest costcode or costcode mask that should have overhead rules applied to it. If you do not enter a value, PENTA uses the “From” Costcode and no range (other than that created by masks).

Note: If masks are used, the “_” wildcards must be in the same positions in the “To” column as they are in the “From” column.

Account Range

If you enter an Account Range, PENTA applies and limits the overhead distribution rule to charges made to accounts in the range. You must enter at least one other “To” rule limitation (OU Id, Job Type, etc.) in order to specify an Account Range. PENTA further limits the rule as it applies to those entities within the context of the costcode range.

In the Account Range From column, enter the lowest account or account mask that should have overhead rules applied to it.

In the Account Range To column, enter the highest account or account mask that should have overhead rules applied to it. If you do not enter a value, PENTA uses the “From” account and no range (other than that created by masks).

Note: If masks are used, the “_” wildcards must be in the same positions in the “To” column as they are in the “From” column.

Calculation tab

System Management > System Rules > Overhead Distribution Rule Information

Use the Calculation tab to specify the calculation parameters for an overhead distribution rule.

Rule #

This field displays the number of the overhead distribution rule from the first tab. The description associated with the rule displays beside the rule number.

You cannot edit this field; it is for display only.

Effective Date

This field displays the Effective Date from the first tab.

You cannot edit this field; it is for display only.

Include Premium Dollars in Overhead Calculation (Y/N)

A Y in this field tells PENTA to include the straight time portion of premium dollars when calculating overhead. A value of N tells PENTA to exclude the straight time portion of premium dollars when calculating overhead.

Example:

Overhead calculates at 30% of straight time wages. An employee is paid $10 an hour for regular hours and $15 an hour for overtime (time and a half). The employee works 40 regular hours and 5 overtime hours.

Straight time hours 40 * $10=$400

Straight time portion of overtime 5 * $10=$50

Premium time portion of overtime 5 * $5=$25

PENTA ignores the $25 of premium wages.

A Y in the Include Premium Dollars in Overhead Calculation field tells PENTA to calculate 30% overhead on the $450 of straight time wages.

An N in the Include Premium Dollars in Overhead Calculation field tells PENTA to calculate 30% overhead on the $400 straight time from regular hours only.

Entry is required. This field defaults as Y.

Mark Up %

A value in this field tells PENTA you wholly or partly define the overhead distribution rule calculation as a percent markup of the related charge amount. The largest percent you can enter is 99.999. Use a decimal point to indicate tenths, hundredths, or thousandths of a percent. You cannot enter more than three digits to the right of the decimal.

Entry is optional. No default.

Note: you must use at least one of the three available methods of defining the rule calculation (mark up %, $/hr, $/entry).

$/Hr Worked

A value in this field tells PENTA you wholly or partly define the overhead distribution rule calculation as a fixed amount per labor or equipment hour charged. Enter the per hour amount. Enter the decimal point to indicate cents. You cannot enter more than three digits to the right of the decimal.

Entry is optional. No default.

Note: you must use at least one of the three available methods of defining the rule calculation (mark up %, $/hr, $/entry).

$/Entry

A value in this field tells PENTA you wholly or partly define the overhead distribution rule calculation as a fixed amount per entry made. Enter the per entry amount. Enter the decimal point to indicate cents. You cannot enter more than two digits to the right of the decimal.

Entry is optional. No default.

Note: you must use at least one of the three available methods of defining the rule calculation (mark up %, $/hr, $/entry).

Currency

When System Option 44 (“Multi-Currency for Accounting”) is set to Y, a Currency may be defined for $/Hr Worked and $/Entry calculations. PENTA selects rules with a currency value matching the transactions debit OU currency before selecting rules with no currency defined (null).

Entry is optional and only allowed when a value exists in the $/Hr Worked or $/Entry fields. No default.

Overhead Applied Account Number

The Overhead Applied Account Number tells PENTA which general ledger account to credit for the overhead amount calculated for the rule. The account name displays in the adjacent field

Entry is required. No default.

Apply to (credit) same OU as is being charged (Y/N)

The value in this field tells PENTA which OU’s overhead applied account to credit during overhead distribution. When the value is Y, PENTA credits the same OU that it debits for the Overhead Distribution entry.

An exception occurs when the overhead applied account is a balance sheet account and the debit OU is not a balance sheet OU. In this case, PENTA credits the balance sheet OU of the debit OU.

When the value is N, PENTA credits the OU of the cost.

Entry is required. This field defaults as N.

Jobs: Cost Type (If Overhead Is To Be Allocated, Allocate To)

An entry in this field tells PENTA to separate the overhead distribution amounts from the charges which generated them and to allocate the distributions to jobs. Enter the Cost Type code you want the distribution amount allocated to. When you enter the Cost Type code, its description automatically appears in the adjacent field.

Entry is optional. No default.

Jobs: Costcode Mask (If Overhead Is To Be Allocated, Allocate To)

Entries in this field tell PENTA to separate the overhead distribution amounts from the charges that generated them and allocate the distributions to jobs. Enter a costcode mask to establish criteria for costcode distribution. PENTA allocates distributions to any costcode matching the mask criteria.

To enter a costcode mask, first identify the costcode segment(s) you want PENTA to consistently charge for the associated expense. Note that you must work with whole segments (phase, branch, detail, etc.) when creating a costcode mask. PENTA will not create matches using partial segments.

Enter the mask, or wildcard characters, to the left of the costcode segment(s) to be charged. Construct the mask in either of two ways:

• Enter a single percent symbol (%) to represent all characters in all segments that you want to accept matches for; or,

• Enter one underscore (_) for each character in each segment that you want to accept matches for. (If you use this method, the number of underscores plus the number of costcode characters must equal the full costcode length.)

If you have a six-digit costcode with three equal segments (phase, branch, and detail) and you want to create a mask for detail 99, you can enter %99 or _ _ _ _99 (four underscores).

Entry is optional. No default.

Work Orders: Cost Type (If Overhead Is To Be Allocated, Allocate To)

An entry in this field tells PENTA to separate the overhead distribution amounts from the charges that generated them and to allocate the distributions to work orders. Enter the Cost Type code you want the distribution amount allocated to. When you enter the Cost Type code, its description automatically appears in the adjacent field.

Entry is optional. No default.

Assets: Expense Cat (If Overhead Is To Be Allocated, Allocate To)

An entry in this field tells PENTA to separate the overhead distribution amounts from the charges that generated them and to allocate the distributions to an asset expense category. Enter the expense category you want the distribution amount allocated to. When you enter the expense category code, its description automatically appears in the adjacent field.

Entry is optional. No default.

Accounts: Account # (If Overhead Is To Be Allocated, Allocate To)

An entry in this field tells PENTA to separate the overhead distribution amounts from the charges that generated them and to allocate the distributions to a general ledger account. Enter the account number you want the distribution amount allocated to. When you enter the account number, its description automatically appears in the adjacent field. If you do not specify overhead allocation parameters, overhead distribution amounts are add to and charge with the originating costs.

Entry is optional. No default.

Rates by Employee tab

System Management > System Rules > Overhead Distribution Rule Information > Rates by Employee tab

In the Rates by Employee tab, PENTA lists each employee the Rule applies to, then recaps the employee’s $/hour Rate, Mark Up Percentage, and Per Entry information.

Rule #

In the Rule # field, PENTA displays the Id of the new rule you entered in the Define From Previous tab, as well as its description in the adjacent field.

You cannot edit this field; it is for display only.

Effective Date

In the Effective Date field, PENTA displays the most recent effective date of the current Rule #.

You cannot edit this field; it is for display only.

Employee Id

Use this field to identify which (active) employee you want to assign to the Rule #. You can assign an employee in this window or via the Employee Payroll Information window’s Overhead Distribution Rule pop-up window.

Entry is optional. No default.

Employee Name

In the Employee Name field, PENTA displays the first and last name associated with the Employee Id.

You cannot edit this field; it is for display only.

$ Per Hour

Use the $ Per Hour field to enter the “dollar amount per hour” overhead rate PENTA uses when calculating the Rule # for the employee. Valid entries are:

• Less than zero (max -99.00)

• Greater than zero (max 999.00)

• Zero

• Null (When this field is null, PENTA uses the rate defined on this window’s Calculation tab when processing the Rule # for this employee.)

You can use this rate alone or in conjunction with the Mark Up % and/or Per Entry rates.

Entry is optional. No default.

Mark Up %

Use the Mark Up % field to enter the “mark up percentage” overhead rate PENTA uses when calculating the Rule # for the employee. Valid entries are:

• Less than zero (max -99.00)

• Greater than zero (max 999.00)

• Zero

• Null (When this value is null, PENTA uses the rate defined on this window’s Calculation tab when processing the Rule # for this employee.)

You can use this value alone or in conjunction with the $ Per Hour and/or Per Entry rates.

Entry is optional. No default.

Per Entry

Use the Per Entry field to enter the “fixed dollar amount per entry” overhead rate PENTA uses when calculating the Rule # for the employee. Valid entries are:

• Less than zero (max -99.00)

• Greater than zero (max 999.00)

• Zero

• Null (When this value is null, PENTA uses the rate defined on this window’s Calculation tab when processing the Rule # for this employee.)

You can use this rate alone or in conjunction with the Mark Up % and/or $ Per Hour rate.

Entry is optional. No default.