You can account for the cost of the units using two different methods.

The first method assumes that you want to recognize the full cost of the units when they are purchased. You enter the cost of the units into Costpoint via accounts payable and charge them to a project-required account, such as materials, the same as any other project cost. Done in this way, the cost is shown on your income statement in the period in which it was entered and posted.

In the second method of accounting for unit costs, you use unit COGS. This method assumes that you want to retain the cost of the units on your balance sheet as a capitalized cost, and recognize a portion of that cost as the units are either billed or incurred, depending on your Cost of Sales Accrual method on the Configure Billing Settings screen. A transfer is made from the balance sheet, using an account such as inventory, to an expense account on your income statement for the cost of the units. When you use this method, a matching occurs between the units used or billed (and revenue recognized) and their cost. When you post the bill or unit usage, the unit COGS transfer is printed separately from, but on the same posting journal as, the bills or unit usage. Note that items that are billed using the automatic billing quantity feature are also included in the cost transfer if they have been included in the setup. You can use unit COGS with the standard, project product, or customer product bills.

This method works the same way whether the unit pricing is done through the generic pricing catalogs or through the CLINs. The Cost Information subtask on the Project Unit Pricing subtask of the Manage CLIN Information screen is available for both. When you open the subtask, you find two methods for recognizing unit cost: Percentage of Sales and Cost Schedule.

To use the Percentage of Sales method, select the Percentage of Sales option and enter a percent in the Enter Percentage of Sales to Calculate Cost Of Goods Sold field. To use the Cost Schedule method, select the Cost Schedule option and enter the appropriate rows in the Cost Details table window. The rules for entering a complete quantity range, which were noted in the Generic Price Catalogs section, are also in effect for the costing schedule. If you are using the Cost Schedule method, the date ranges do not have to match the Unit Price Schedule. However, to ensure that each date range on the Unit Price Schedule has a corresponding date range on the Cost Schedule, you may want to enter the same date ranges in both tables. Note that the cost schedule method allows for cost breaks based on "total" costing only, even if the cost schedule is entered using the CLINs, which allow for "incremental" pricing.

You must set up an account to serve as the unit clearing account. Costpoint uses this account to credit, or decrease, the amount of inventory costs on your balance sheet as the unit COGS are recognized. The account should be an asset type that points to a balance sheet line, such as "Inventory." The account does not need to be project-required unless you want a project posted to the general ledger for informational purposes. The unit COGS account is used to record the unit COGS on the income statement. Set up this account as a non-labor type that points to an income statement line, such as "Materials" or "Unit Cost of Goods Sold." This account does not need to be project-required, unless you want a project posted to the general ledger for informational purposes or you want it to appear on your project reports as a project cost. Because neither the COGS nor the unit clearing accounts must be project-required accounts, you do not have to include them in the project account groups or link them to the projects, unless you plan on using projects with them.

See the "Default Accounts" section for a full discussion on how the unit COGS recognition accounts are designated.