Select this calculation method to recognize COGS based on the Estimated Cost to Complete as a percentage of Estimated Contract Value multiplied by the Delivery Amount.

This method is applicable only for projects that bill using government form 1443, Contractor's Request for Progress Payment. With this type of billing, delivery invoices are used whenever a finished good is shipped.

To use this option, you must complete the Estimated Total Value and Estimated Costs fields. If you enter the same total cost or total value amount that is displayed in the Project Values group box, Costpoint assumes that you want this field to equal the amount of modifications that were entered for this project, and it is updated whenever a new modification is entered. If you enter an amount that is different from the total cost or total value amount, Costpoint does not automatically update whenever a new modification is entered, and you must update this field manually. This selection also gives you the option to recognize an ITD loss up-front instead of prorating it throughout the life of the project. If you want to recognize an ITD loss up-front, complete the ITD Loss Recognized field. Make any modifications to these three fields before computing the COGS entry.

To calculate COGS using this option, Costpoint adds the estimated cost to complete (the Estimated Costs field) to the Total WIP Costs to arrive at Total Costs at Completion. It then subtracts the ITD Loss Recognized, if applicable, from the Total Costs at Completion and divides the result by the Estimated Total Value. It multiplies the resulting cost percent by the ITD Delivery Amount from the Manage Project Bill Summary screen, up to and including the fiscal year and period being calculated, to arrive at the COGS Before Loss. It adds the ITD Loss Recognized to COGS Before Loss to arrive at the final COGS amount. Each time you execute the Create Cost of Goods Sold Entries screen, the balance of the general ledger account designated with the WIP TRANS OUT Function Code for that project's account group is summarized for the fiscal year, including the beginning balance, up to and including the period of calculation. This amount, which is the COGS already posted Inception-To-Date, is subtracted from the COGS calculation amount to arrive at the amount to post. The owning organization of the project is used for calculation and posting purposes. Because this method uses delivery invoices for Progress Payment bills, you must set it up at the top level of the project.

Example:

40,000	Estimated Cost to Complete
+ 60,000	WIP Costs
= 100,000	Total Costs at Completion

100,000	Total Costs at Completion
- 0	ITD Loss Recognized
100,000	Subtotal

100,000/200,000 = 50%        Subtotal/Estimated Total Value = Cost Percent

30,000	ITD Delivery Amount
x .50	Cost Percent
15,000	COGS Before Loss

15,000	COGS Before Loss
+ 0	ITD Loss Recognized
15,000	COGS Calculated

15,000	COGS Calculated
- 12,000	"WIP Trans Out" G/L Account Balance
3,000	Amount of COGS to Post

Because this formula is based on billed delivery amounts, you must post delivery invoices before proceeding with the COGS processing. Next, run the Compute Burden Costs screen to ensure the WIP costs have been updated for inclusion in the COGS entry. Then, compute the COGS entry (the Create Cost of Goods Sold Entries screen) and post it. After posting the COGS entry, run the Compute Burden Costs screen again, followed by Compute Revenue screen. If you want a WIP Project Status Report, you must run the Update Project Status Report Table screen before printing the report.