Personnel cost to perform the process group "perform revenue accounting" per process group FTE
This measure calculates personnel cost per process full-time equivalent (FTE) employee to perform the process group "perform revenue accounting," which involves comparing revenue targets to reality and reviewing all transactions and entries passed in final accounts in order to examine profits. Personnel cost refers to employee salaries/wages, bonuses, benefits, etc. This measure is part of a set of Cost Effectiveness measures that help companies understand all cost expenditures related to the process "perform revenue accounting."
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Compute this Measure
Units for this measure are dollars.
(Personnel cost to perform the process "process customer credit" + Personnel cost to perform the process "invoice customer" + Personnel cost to perform the process "process accounts receivable (AR)" + Personnel cost to perform the process "manage and process collections" + Personnel cost to perform the process "manage and process adjustments/deductions") / (Number of FTEs who perform the process "process customer credit" + Number of FTEs who perform the process "invoice customer" + Number of FTEs who perform the process "process accounts receivable (AR)" + Number of FTEs who perform the process "manage and process collections" + Number of FTEs who perform the process "manage and process adjustments/deductions")
Key Terms
Total Annual Revenue/Net Revenue
Total annual revenue is net proceeds generated from the sale of products or services. This should reflect the selling price less any allowances such as quantity, discounts, rebates and returns. If your business entity is a support unit and therefore does not directly generate revenue, then provide the revenue amount for the units you support. For government/non-profit organizations, please use your non-pass-through budget. For insurance companies the total annual revenue is the total amount of direct written premiums, excluding net investment income. Note: Business entity revenue needs to only include inter-company business segment revenue when the transactions between those business segments are intended to reflect an arm's length transfer price and would therefore meet the regulatory requirements for external revenue reporting.
FTE - (full-time equivalent employee)
To calculate the number of full-time equivalents employed during the year for each respective process or activity, you must prorate the number of employees and the hours spent performing each process/activity. Assume that a full-time worker represents 40 hours per week. Provide the average number of full-time equivalents employed during the year for each respective process. Include full-time employees, part-time employees, and temporary workers hired during peak demand periods. Allocate only the portion of the employee's time that relates to or supports the activities identified for an applicable process. Prorate management and secretarial time by estimating the level of effort in support of each activity, by process.
For example, a part-time secretary in the finance department for XYZ, Inc. charges all of his time to finance department activities. He works 20 hours per week. The secretary splits his time evenly supporting employees working in the general accounting process and the financial reporting process. Thus, his time should be allocated by process. So, if he works throughout the year and supports these two processes, his time would be split evenly as:
20hrs/40hrs = .5FTE * 50% for general accounting = .25FTE for general accounting
20hrs/40hrs = .5FTE * 50% for financial reporting = .25FTE for financial reporting
Personnel Cost
Personnel cost is the cost associated with personnel compensation and fringe benefits of employees (i.e., those classified as FTEs which includes both full-time and salaried/hourly employees) contributing to each respective process. Personnel cost should include all of the following costs.
Employee Compensation: Includes salaries and wages, bonuses, overtime and benefits.
Fringe: Includes contributions made towards the employees' government retirement fund, workers compensation, insurance plans, savings plans, pension funds/retirement plans, and stock purchase plans. This should also include special allowances, such as relocation expenses and car allowances.
Cost Effectiveness
Cost effectiveness measures are those in which two related variables, one of which is the cost and one of which is the related outcome related to the expenditure are used to determine a particular metric value.