CenterPoint® Fund Accounting - Distribute General Revenue and Expenses or Payroll Expenses

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Account Distribution - Overhead Expenses by Percentage Video - Duration: 13 min 16 sec

Apply Distributions Video - Duration: 7 min 45 sec

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Overhead expenses are those production and non-production costs not readily traceable to specific departments. Overhead expenses encompass three general areas: indirect materials, indirect labor, and all other miscellaneous production expenses, such as taxes, insurance, depreciation, supplies, utilities, and repairs. Therefore, overhead expense is part of the total costs of maintaining and staffing a business. Although overhead expenses are not directly related to any specific area of your business, they do play a part in the profitability of each area. Account distributions can be used to automate the process of expensing overhead to department.

Expenses can be distributed by percentage, and can be distributed at the time the expenses are entered or later when you know exactly how they should be distributed. A distribution can be setup that distributes all overhead expenses or distributions can be setup for various scenarios (for example, distribute utility costs to the various entities of the business). Distributions can also be used to distribute unallocated revenue.

EXAMPLE: Overhead expenses, such as insurance expense, will be distributed to all profit centers based on each profit center’s percent of total gross revenue. In our example, dairy is 55% of the operation. Crop is 45% with two crops of corn (60%) and soybeans (40%).

If the insurance bill is $1,000:

$550 insurance expense would be allocated to dairy

$270 insurance expense would be allocated to corn

$180 insurance expense would be allocated to soybeans

Step A: Create an Account Distribution

Step B: Assign Accounts to the Distribution

Step C: Test the Distribution (optional)

Step D: Apply Distributions (only if distribution in Step A was setup with the apply later timing option)

Step A - Create an Account Distribution

  1. Select Setup > Accounts > Distribution.
  2. Enter an Abbreviation (optional), Name and Description to easily identify this account distribution.
  3. The Active check box will automatically be selected, clear the check box if this distribution is no longer active. If the check box is cleared, accounts cannot be assigned on the Assign Accounts tab and if accounts are assigned when the distribution is inactivated, a message displays reminding you that the accounts will be removed when the distribution is saved.
  4. Select the Distribution Detail tab. The distribution tab will be used to identify how the expenses should be distributed. A distribution can be dispersed to an unlimited number of department.
  5. Click New in the lower left corner.

  1. Enter a Name for this portion of the distribution, such as Utility Distribution.
  2. Select the appropriate Type. Percentage will allow you to distribute based on a percentage of an amount.
  1. Select the appropriate Timing option. Choose between:
    • Later: This option should not be used for distributing Payroll expenses.This option will record the revenue or expense to the account but won't distribute it to department until later when the Apply Distributions process is completed (defined in step D below). This option is for those that won't know at the time of purchase how they'll be using it, thus how they'll want it distributed.
    • At Transaction: At the time the transaction is entered, it will record the revenue or expense and it will automatically distribute it to the previously defined department.
    Note: If you are changing the timing for an existing distribution, an Are you sure you want to change the distribution timing? message will display to inform you that the timing selection affects the account activity included in Processes > Periodic > Apply Distributions and affects editing a general journal transaction that used this distribution. Click Yes to continue or No to cancel the change to the timing for the existing distribution.
  2. Enter the Percentage of Total Amount for this portion of the distribution.
  1. In the grid, select the appropriate Department for this portion of the distribution.
  1. Repeat steps 4-8 to identify each disbursement breakdown in the distribution. The Total Distribution field on the left will keep a running total of all details included in the distribution.
  2. Click Save.

Step B - Assign Accounts to the Distribution

  1. Select Setup > Accounts > Distributions. Highlight the appropriate Distribution and click Edit.
  2. Select the Assign Accounts tab.
  3. The Assign Accounts to Distributions area will list all accounts not already assigned to other distributions on the left side of the screen. Each account that should use this distribution should be moved to the right side of the screen by double-clicking on the account or using the green arrow buttons located between the account lists.

  1. Once all appropriate accounts for this distribution have been selected, click Save. If you have additional distributions that need accounts assigned, you can also use the green left and right arrows to the left of the Close button to move to the next or previous distribution. The distribution name will be displayed directly below the tabs.
  2. You can verify the distributions you have assigned to accounts by printing any of the Chart of Accounts reports found in Reports > Reports > Setup Lists > Accounts > Chart of Accounts, Chart of Accounts with Levels or Chart of Accounts by Distribution.

Step C - Test the Distribution (optional)

The Test Distribution step allows you to verify that a distribution has been setup correctly. The test does not actually distribute the amounts, it just displays an example of what would happen if transactions were entered for that amount.

  1. Select Setup > Accounts > Distributions. Highlight the appropriate Distribution and click Edit.
  2. Select the Distribution Detail tab and click on Test in the lower left side of the screen.
  1. Enter an amount in the Distribute This Amount field and click Distribute.
  2. The total dollars are allocated based on the distributions defined on the Distribution Detail tab.
  3. Click Close.

Step D - Apply Distribution (only if distribution in Step A was setup with the apply later timing option)

If you have chosen Later as the timing option on a distribution (step A6 above), there is an additional processing step that manually distributes the dollars. We recommend being consistent on the frequency and time you run Apply Distribution, such as at the end of each month.

Note: If At Transaction was selected as the timing option on a distribution, step D is skipped entirely.

 

Prerequisite

If the departmentbreakdown in the Distribution Details screen were left blank in Step A8, they must be defined prior to processing Apply Distribution transactions.

  1. Select Processes > Periodic > Apply Distributions.
  2. Click Create New.

  1. In the Company box, enter the company name that the apply distribution transactions should be created for.

  1. In the Transaction Date box, the next "calculated" date to create apply distribution transactions displays. The date is calculated by taking the last date transactions were created and incrementing the date one month. The day of the month will default to the last day of the month, but can be changed.
  1. In the Transaction Number box, enter the transaction number for the apply distribution transactions or click the sequence number icon and select the next available sequence number. See the Maintaining Sequence NumbersMaintaining Sequence Numbers topic for more information.
  2. In the Memo Line 1 box, enter an optional memo for the transaction. In the Line 2 box, if the transaction is assigned a name that was setup with a default memo, it will display automatically and can be overridden.
  3. Enter an optional Notation.
  4. Click OK.

  1. If you wish to change the distribution amounts before posting, click Edit at the right of the transaction.
  2. Click Post to complete the process.
  3. From the List tab, you can perform the following actions on a posted transaction:

  • Edit a posted transaction: Select the posted transaction, click Edit, change the transaction, click OK, and then click Post. The distribution transaction recalculates using the same date, company, transaction number, and notation.

  • Delete a posted transaction: Select the posted transactions, click Delete, click Yes. All distribution transactions for the company and date will be reversed.
  1. If you wish to change the distribution amounts in the Amount column before posting, type over the existing amount. Click Edit to add/change/remove account distribution detail lines and recalculate the remaining details (click Reset to set the distribution back to the amounts prior to any changes).
Hint: Setup a scheduled reminder and CenterPoint will remind you to Apply Distributions on a consistent frequency. View the Scheduled Reminder document for step by step instructions.

Document: 3077

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