Cost Accounting – How the Magic Works

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The Cost Accounting module of Elements allows you to accurately determine what your per diem rates should be in order to break even in the facility operation. So, how does it do this?

Fundamentally, the module allows you to enter all the costs involved in running your facility at a level of granularity that you chose. You can also define the distribution period for any of these costs, the date range across which the cost is applied, and also the location(s) and cage type(s) that the cost applies to.

Once all the costs are in, the module can then perform a complex calculation that takes the costs and allocates them based on the actual census data for each cost’s distribution period. The easy way to think of this is that the costs of running the facility are divided by the care days for each location and cage type combination, which is the same combination at which the per diem rates are set for use in Billing.

Of course, there is a bit more to it than that! The transactions that you enter can be either “cost” transactions (e.g. diet, bedding, equipment, utilities, etc.) or “labor” transactions (technician time, admin time, etc.). Each labor transaction can be labeled as “direct” or “indirect”, which then affects how it is distributed.  And each transaction can be categorized based on the level of granularity that you want to employ using three parameters: Expense Class, Expense Account, and Cost Type.

In addition, since cage types are not all created equal (for example, the cost to maintain a regular mouse cage may differ from a ventilated cage, or one with automatic watering, or a breeding cage), the calculation also uses the mysterious RQF (Relative Quotient Factor), which accounts for these variations.

The Cost Accounting module can be used with summary cost data, or at a very granular level. The latter requires a lot of data entry to ensure all the costs are entered and categorized. For some customers, this detail is the basis of their financial management of the facility, so it is considered well worth it. For others, there is the option of entering summarized costs, or of using the web service API to import the transactions from an external finance system.

As with all modules of Elements, our dedicated services team is available to provide you with implementation help and training on the use of this module, either as part of your main Elements implementation, or as an add-on.

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