Setup of Units
Before they can be included in revenue or billings, you must first set up units as items (parts, goods, or services) in Costpoint Product Definition, an add-on product used with Costpoint Purchasing, Inventory, Sales Order Entry, and Billing.
To take full advantage of the unit features in Costpoint, you must use Product Definition. Without Product Definition, billing for units is limited to entering generic-type bills on the Manage Project Product Bills screen and the Manage Customer Product Bills screen. In addition, if you are planning on recording unit COGS and/or unit warranty expense accruals, you must use the Sales Group Abbreviation code feature, which is available only through Costpoint Product Definition.
After setting up items as parts, goods, or services, you must further define them on the Manage Item Billings screen before you can link them to project pricing or to generic price catalogs. You can also enter additional information regarding selling descriptions and shipping dimensions in this screen.
There are two methods for establishing pricing information for units: generic pricing catalogs in Costpoint Product Definition, and CLIN/project unit pricing (CLINs) in Costpoint Project Setup. (Please note that in Costpoint, the term "CLIN" is used in a generic sense to mean a pricing schema for a group of items to be used by and invoiced to a particular project.) A summary of their capabilities follows.
Generic Price Catalogs
As noted previously, you establish the generic price catalogs in Costpoint Product Definition. Think of catalogs as sets of items that you plan on billing to your customers. After establishing price catalogs on the Manage Price Catalogs screen, set up the product price catalogs on the Manage Product Price Catalogs screen, where you link the items to a specific price catalog, and where you enter the item prices, along with their associated quantities and date ranges. You can link more than one item to a given catalog; you can link the same item to more than one catalog.
You must follow several rules when initializing unit price information. Unit price information is entered on the Manage Product Price Catalogs screen. First, consecutive quantities from ".0001" to "9,999,999,999.9999" must exist for any given date range. If you do not enter the required range of quantities on a single line, you must continue it on subsequent lines for that same date range. The To Qty field of the previous line must contain the value "9,999,999,999.9999" before you can enter a new date range. Also, there cannot be any gaps or overlap in the date range.
Example of a Unit Price Schedule:
| From Qty | To Qty | Unit Price | Starting Date | Ending Date |
|---|---|---|---|---|
| 0.0001 | 1,500,000.0000 | 10.0000 | 01/01/1997 | 06/30/1997 |
| 1,500,000.0001 | 3,000,000.0000 | 9.0000 | 01/01/1997 | 06/30/1997 |
| 3,000,000.0001 | 9,999,999,999.9999 | 8.0000 | 01/01/1997 | 06/30/1997 |
| 0.0001 | 1,000,000.0000 | 12.0000 | 07/01/1997 | 12/31/1997 |
| 1,000,000.0001 | 9,999,999,999.9999 | 11.0000 | 07/01/1997 | 12/31/1997 |
Items set up through the generic price catalogs use "total" pricing for all units charged to the price catalog/item/revision combination. Total pricing means that a set unit price is used for all items on a given order. If a price break is given based on quantity, the price break applies to ALL items on that order; not solely to the number of items above the price break quantity. (An example of total pricing is provided in the "CLINs" section.) You cannot use unit ceilings in the generic price catalogs, nor can you bill units automatically. You can, however, use both the Customer Product Bills and Project Product Bills, as well as the Standard Bills, with the generic pricing catalogs.
CLINs
You can also group a set of items that are used by and invoiced to a particular project by using the CLINs in the Projects folder. (Note that in Costpoint, the term "CLIN" refers to a specific pricing schedule for a group of items billable to a particular project. The actual prices for the CLIN items are set up on the Project Unit Pricing subtask of the Manage CLIN Information screen.) Using the Manage CLIN Information screen, establish the CLIN and description for the project. Using the Item Linkage subtask, link the items that are applicable to this CLIN. You can link more than one item to a given CLIN, and you can link the same item to more than one CLIN.
The Item Linkage subtask on the Manage CLIN Information screen contains the unit ceiling, automatic billing quantity, and basis for pricing information. This subtask also contains two columns, Quantity Sold To Date and Quantity On Order, that are used only if you have purchased Costpoint Sales Order Entry.
The unit ceilings set up on the Item Linkage subtask may be applicable to revenue, billing, or both. If you use the automatic billing quantity feature, the Calculate Standard Bills screen automatically generates an invoice each billing cycle for the number of items entered in the field. The basis for pricing, using CLINs, may be "total" or "incremental." As noted in the "Generic Price Catalogs" section, total pricing means that a set unit price is used for all items on a given order. Consequently, if a price break is given based on quantity, the price break applies to ALL items on that order, rather than solely to the number of items above the price-break quantity. Incremental pricing means that items on a single order can be priced at several different prices, based on the quantity pricing schedule (only the number of items ABOVE a given price-break quantity carry the lower price).
Example of Total Pricing vs. Incremental Pricing
Pricing Table:
| From Qty | To Qty | Unit Price | Starting Date | Ending Date |
|---|---|---|---|---|
| 0.0001 | 100.0000 | 10.0000 | 01/01/1997 | 12/31/1997 |
| 100.0001 | 9,999,999.9999 | 9.0000 | 01/01/1997 | 12/31/1997 |
Quantity of Units Billed: 200
Total Pricing: 200 x 9.0000 = 1,800.00
Incremental Pricing: 100 x 10.0000 = 1,000.00
100 x 9.0000 = 900.00
1,900.00
After setting up the CLINs and linking the items, enter the pricing information on the Project Unit Pricing subtask on the Manage CLIN Information screen. This screen is referenced for the unit prices and price increments that are used to compute unit-based billings and revenue for projects with unit-based revenue formulas. The same pricing rules noted in the "Generic Price Catalogs" section apply to CLIN pricing.
Both Project Product Bills and Standard Bills can use CLIN pricing. Customer Product Bills must use catalog pricing, because the CLINs require that a project be specified.
For a full discussion on the Cost Information, Warranty Information, and Defaults subtasks, which are accessed from the Project Unit Pricing subtask of the Manage CLIN Information screen, please see the appropriate sections later in this topic (Unit Cost Recognition, Unit Warranty Expense Accrual, Default Accounts).