*COST SECTIONS (Core cost centers and Allocation of costs)*
<span style="color: #ff0000"><strong><span style="text-decoration: underline; ">UPDATE of 22nd July 2011:</span></strong></span>
<span style="color: #ff0000"><strong>Additional comment for cost centers 164 and 173: social expenditures related to trainees, apprentices , worker councils cannot be reported in Cost sections 164 (HR function cost). Personal costs</strong></span>  <span style="color: #ff0000"><strong>should be reported preferably in the unit of the employee, or, if not possible,</strong></span> <span style="color: #ff0000"><strong>in 173 (social benefits). External costs are reported in cost section 173.</strong></span>
<span style="color: #ff0000"><strong><span style="text-decoration: underline; ">UPDATE of 5th May 2011:</span></strong></span>
<span style="color: #ff0000"><strong>Cost of Technical control: fix Assets management (technical inventory) and investment bugeting must be reported in cost center 104 (Engineering - study office) and not in 163 (finance)</strong></span>
<span style="color: #ff0000"><strong><span style="text-decoration: underline; ">UPDATE of 13 april 2011:</span></strong></span>
<span style="color: #ff0000"><strong>To allow identification and reporting of HR FTEs and costs, all HR manager and staff are allocated to HR cost center 164. Social benefits activities and expenditures are allocated to cost center 173.</strong></span> 
<span style="color: #ff0000"><strong>Change of wording in order to reflect better the new organization Horizon</strong></span>
<span style="color: #ff0000"><strong>BU management cost reported under FATA as from 1/4/2011. Not necessary anymore to report these cost separately under FCAS.</strong></span>
<span style="color: #ff0000"><strong>Shared Services renamed General services (to avoid confusion with Shared Service entities)</strong></span>
<span style="color: #ff0000"><strong><span style="text-decoration: underline; ">UPDATE of 5 january 2011:</span></strong></span>
<span style="color: #ff0000"><strong>To allow identification and reporting of Finance FTEs and costs, The sector and BU controllers are allocated to  Finance cost center 163 and not any more to 182 Sector and BU management</strong></span>
*This document describes the various FUNCTIONS (both internal and external) and the place where they are accounted for in cost center accounting.* 
<span style="color: #ff0000"><strong>SCOPE:</strong></span> 
<span style="color: #ff0000"><strong>This note applies to the costs generated by the organizational units of the related reporting entities. The organizational units (cost centers) are categorized according to the purpose of their own activities and not according to the nature of services provided <em>(these latter are maintained through cost elements and are not subjected to cost centers)</em>.</strong></span> 
<span style="color: #ff0000"><strong>The note "</strong></span>[{*}PRINCIPLES ABOUT THE USE OF ORGANIZATIONAL COST CENTERS*|http://teamsites.solvay.com/sites/DCFI-CC-GAC/Accounting/Use%20of%20Organizational%20cost%20centers.doc]<span style="color: #ff0000"><strong>" forms an integral part of this document.</strong></span>
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*The abbreviation C/C is used to indicate cost centers.*
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*+DIRECT MARKETING COSTS+*
[SF<ac:structured-macro ac:name="anchor"><ac:parameter ac:name="">_Hlt282003183</ac:parameter></ac:structured-macro>GB|] - SECTION OF BUSINESS OVERHEADS
*+DISTRIBUTION COSTS+*
[SFDI|] - SECTION OF DISTRIBUTION COSTS
*+SUPPORT SERVICES+* 
[SFT<ac:structured-macro ac:name="anchor"><ac:parameter ac:name="">_Hlt282003167</ac:parameter></ac:structured-macro><ac:structured-macro ac:name="anchor"><ac:parameter ac:name="">_Hlt282003168</ac:parameter></ac:structured-macro><ac:structured-macro ac:name="anchor"><ac:parameter ac:name="">_Hlt292369223</ac:parameter></ac:structured-macro><ac:structured-macro ac:name="anchor"><ac:parameter ac:name="">_Hlt292369224</ac:parameter></ac:structured-macro>A|] - SECTION OF ADMINISTRATIVE AND MISCELLANEOUS OVERHEADS
[S<ac:structured-macro ac:name="anchor"><ac:parameter ac:name="">_Hlt292369642</ac:parameter></ac:structured-macro>F<ac:structured-macro ac:name="anchor"><ac:parameter ac:name="">_Hlt292369251</ac:parameter></ac:structured-macro>GT|] - SECTION OF TECHNICAL OVERHEADS
*+SFAU -+* [{*}OTHER COST CENTERS OR COST OBJECTS*|]
 \\

SFGB - SECTION OF BUSINESS OVERHEADS
181Sales force
Main activities of representatives and contacts with customers, i.e.:

• • Present and sell various qualities of products
  • Determine and select contacts in order to ensure the best possible coverage of the market in harmony with the commercial strategy
  • Identify customers' needs and formulate answers in agreement with the commercial strategy
  • Implement the commercial strategy in order to meet the objectives defined in term of market shares and customer satisfaction
  • Collect and inform the RBU/GBU of all market trend and help them to determine the necessary action plans as well as the product/market strategy

Allocation:
Allocation to the divisions based on a fixed grid under FCOMT. As reference we recommend to take the best estimate of the time to spend on the reporting Divisions..
182 BU management
BU Management (including the Supply Chains), and their secretarial staff
The BU Management includes costs whatever the localization where the BU develop their activities (SCH, Region, subsidiaries).
Liaison Production-Sales (LVP)
Actions allowing to stay on the market (e.g.: protective action for some products)
Product liability insurance
Allocation:
The costs invoiced by the BU and other management organizations are directly allocated to the reporting cost centers under FATA. This applies for the income realized by the invoicing entity (class 7) and for the expenses accounted for by the receiving entity (class 6). These cost elements of classes 6 and 7 are standardized.
The BU are allocated based on the time to spend for each Division / Region. Afterwards, the portion of each producing company is defined according to its share in the NETV of the Division / Region.
The entire costs are to be charged to the various receivers C/C.
183Operational logistic management
The responsibilities of this C/C, related to the supervision of distribution costs, are a.o. the following:

• • Optimization of the logistic network, by making the most of all possible synergies
  • Management of the logisticians network in running the operational flows, using resources efficiently, in order to achieve the objectives set up by the BU
  • Development of a strategic plan for the BU activities of the "supply chain" or similar, by their optimization and by the introduction of new technologies, calling on the Competence Centers
  • Coordination of transports and of external warehouses
  • Management of transport tariffs
  • Forecasting and control of the logistic budget

Remark: Within FOCUS, this C/C corresponds to the RELOM function (Regional Logistic Operation Manager).
Allocation:
Allocation to the divisions based on a fixed grid at the time of the budget. As reference we recommend to take the best estimate of the time to spend on the reporting Divisions. The keys based on NETV are to be avoided. The entire costs are to be charged to the various receivers C/C.
184Local commercial management and Marketing
Commercial Management and its secretarial staff,
Marketing activities, i.e.:

• • Segmentation, classification of customers
  • Elaboration of basis sales conditions
  • Methods of prospecting the market
  • Analysis, synthesis and distribution of information related to the markets and sales of products
  • Definition of product strategies and of commercial objectives
  • Development of product-mix
  • Setting-up of the sales plan
  • Advertising actions
  • Contacts with the 'key accounts'

Management of the subsidiaries and their secretarial staff.
Note: Distinction can be made, if needed, in order to segregate the commercial management C/C and the marketing C/C.
Allocation:
When marketing C/C by division exist: direct allocation to this C/C, then 100% on the divisions. The remaining costs are allocated to the divisions based on a fixed grid at the time of the budget. As reference we recommend to take the best estimate of the time to spend on the reporting Divisions. The keys based on NETV are to be avoided. The entire costs are to be charged to the various receivers C/C.
187Pricing
To collect the Group services charge by entity
Allocation: 100% to FATA .
188Technical Assistance to Customers (ATC)
Activities of technical support to the customers in the aim of optimizing and diversifying existing products
Technical coordination of products
Note that the ATC function of NOH is invoiced under RECH.
Allocation: To the divisions based on a fixed grid at the time of the budget. As reference we recommend to take the best estimate of the time to spend on the reporting Divisions. The keys based on NETV are to be avoided. The entire costs are to be charged to the various receivers C/C.
189Order Fulfillment
Activities of management, follow-up and control of the good execution of orders
Set-up and follow-up the manufacturing activities and programs (production-sale interfaces)
Customer-care service (CCS)

• • The front office, also named sales desk is in charge of the order fulfillment, the delivery and the invoicing follow-up.
  • The back office is in charge of verifying the product availability and of distributing the products.

Follow-up of claims
A more detailed breakdown can be necessary. In this case, in addition to a 'shared activities' C/C, there could be more detailed C/C such as the customer-care service, that in turn can be subdivided into front office and back office.
Allocation:
In general, the costs are reported under FCOMT.
In all cases, the reference will be a volume of activities foreseen in the budget. In the case of the back office, we could allocate the costs on the divisions based on the budgeted volume of the distribution, possibly weighted according to the destinations and the complexity of the necessary transactions.However, the cost related to the follow-up of production planning is charged to the cost prices of production. The claims related to the product quality can also be charged to the cost prices of production.
SFDI - SECTION OF DISTRIBUTION COSTS
191Shared distribution costs (sales logistics)
Activities associated with packaging, warehousing and loading of finished products, carried out in the production site by the same service (manpower, energy, maintenance and depreciation of premises and equipment: machines, etc., various related costs, etc). The related costs are difficult to dissociate in terms of each activity, partially or in full.
Group(s) of activities under the same cost driver:

• • Packaging of finished products
  • Warehousing and loading of packaged finished products
  • Loading of bulk finished products

*Allocation{*}:
Shared costs are allocated by activity: packaging, warehousing and loading, and, among them, by product, distinguishing between packaged products and bulk products.Note: Packaging costs that are likely to be included in the shared distribution costs never include the cost of the container, i.e. the packaging itself.
The allocation can be decided upon in various ways depending on the information available: see the various hypotheses mentioned in [appendix A|].
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<ac:structured-macro ac:name="anchor"><ac:parameter ac:name="">cc192</ac:parameter></ac:structured-macro>{*}192Shipping department - packaged & bulk*
Activities related to the shipping of bulk or packaged finished products, to customers or to commercial platforms, starting from the production site (site platform), or possibly from external logistics platforms.
*Group(s) of activities under the same cost driver{*}:

• • Freighting of vehicles
  • Reception and control of vehicles on site
  • Weighing operations
  • Administrative tasks (preparing dispatch documents, orders, etc)
  • Vehicle dispatch

*Allocation{*}:
Allocation to the C/C "warehousing & loading costs of packaged products" ([194|]) and "loading costs of bulk products" ([195|]), <span style="color: #008000">based on the cost driver "quantities shipped as budgeted for the year Y+1",</span>  <span style="color: #008000">using an annual fixed price</span>.
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<ac:structured-macro ac:name="anchor"><ac:parameter ac:name="">cc193</ac:parameter></ac:structured-macro>{*}193Finished goods packaging department*
Packaging operations on finished goods (in bags, bulk-bags, octabins, etc), made on the production site or on an external logistics platform, for warehousing or direct loading on means of transport, and shipping to customers or to a commercial platform.
*Group(s) of activities under the same cost driver{*}:

• • Managing and keeping inventories of new and used packaging items (removal of packaging at the end of the life cycle, managing shuttle packaging: Collection, sorting and storage, cleaning and repair, etc)
  • Cleaning and maintenance of equipment
  • Transfer of bulk products to the packaging line
  • Packaging operations (packaging, marking, weighing, pallet loading, covering, etc)

Remarks:

• • Tanks are included in the production cycle. The starting point for packaging or loading bulk products will therefore be the outlet device from storage tanks or silos, with the exception of some particular cases.
  • The terminology "packages" and "containers" are used to designate recipients intended to contain the finished product, and hence, also designate grouping (and/or cohesion) accessories of individual packages to make up ship load units (pallet loading, covering, belting, etc.): the general term is "packaging".
  • Recipients such as containers, tanks, and tubes that are fixed to remain on a transport vehicle are considered as forming an integral part of this vehicle. However, if it is required to separate them from this vehicle in order to fill them, they are considered as packaging.

Allocation:
General principle:

• • The nomenclature of finished goods is shared by cost centers 193, 194, 195 and by cost prices (325).
  • Packaging costs related to each of the products manufactured are assigned to the cost price of warehouse inputs of these products, including over-packaging.

Rules for allocating costs:

• • Packaging items: Direct assignment to packaged products (product nomenclature)
  • Manpower directly related to packaging, i.e., the cost of staff directly involved in packaging operations: Wherever possible, direct assignment by product (but not by packaging type). If identification of work performed by product is not possible, the allocation will be made in proportion to the tons packaged, possibly with a coefficient (see 2.3.).
  • Other packaging costs: These include:
    • Support staff or staff not directly involved in packaging operations
    • Maintenance costs of equipment (building, materials, etc)
    • Work performed by machines from the handling service
    • Work performed by other support services of the production site
    • Cost of utilities used
    • Fire insurance
    • Other various costs

The allocation is made in proportion to the direct packaging manpower, should the identification of work by product be possible. Should this not be possible, in proportion to the tons packaged, possibly with a coefficient.
Important remarks:

• • With regard to packaging, the following should be distinguished:
    • Packaging, i.e. sold with the product (bags, drums, pallets, covers, etc.).
    • Recoverable packs and bags, called "shuttle" (i.e. used several times after recovery).
  • With regard to recoverable packaging, the following distinction should also be made:
    • Light packaging, with a relatively low unit value and used with generally large movements (metal or plastic drums, carboys, pallets, etc.). Together with lost packaging, they represent the commercial packaging warehouses. Note: Internal storage and handling pallets (i.e. that remain at all times inside the production site) are recorded under the fixed asset account "transportation equipment".
    • Heavy packaging, with a high unit value and generally subject to safety controls (containers, tanks and cylinders of liquid Cl2, etc.). These are registered individually and included in fixed assets.

194Warehousing & loading costs of packaged products
Activities related to the following operations:

• • Warehousing of packaged finished goods on the production site
  • Storage of these products
  • Movement from the warehouse and loading onto a transport vehicle (railcar, truck, boat, transport container, etc) for shipping to customers or to commercial platforms outside the production sites.

Group(s) of activities under the same cost driver:

• • Packaged products returned from a packaging line and transferred to warehouses
  • Warehousing
  • Return of stock for loading
  • Stock-keeping (incl. inventories)
  • Cleaning and maintenance of installations, particularly silos or tanks which, by exception, are not included as part of the production (incl. waste treatment).
  • Label operation of products, titration and sampling of products.
  • Items returned to storage
  • Inspection of vehicles
  • Loading onto transport, weighing where necessary.
  • General handling
  • Handling of containers (storage and presentation of empty containers at the loading point; handling of loaded containers)

*Allocation{*}:
The various homogeneous activities are assigned to the cost center of warehousing and loading costs of the various products without considering either the type of packaging or the means of transport. This C/C is then allocated by product on the basis of quantities packaged and shipped (with coefficients).
The primary costs that can easily be assigned to the various products are allocated immediately.
This C/C also receives the allocation of the "shared distribution costs" ([191|]) and of the "shipping department - packaged & bulk" ([192|]).
Remark on "de-bagging": 

• • When performed for repackaging purposes in another type of container: The cost resulting from this emptying process should be assigned to the new packaging.

  • When performed for bulk loading: The cost of this emptying is allocated to the C/C "loading costs of bulk products" ([195|]).

The recipients are the various PIF under MAGA.
195Loading costs of bulk products
Activities related to loading operations in the production site onto a transport vehicle (railcar, road truck, boat, transport container) of bulk finished goods from silos or bulk storage warehouses.
Group(s) of activities under the same cost driver:

• • Recovery of stock for loading
  • Cleaning and maintenance of equipment, particularly of silos or tanks that, by exception, do not form part of the production
  • Titration and sampling of products
  • De-bagging operation
  • Inspection of vehicles
  • Loading onto transport
  • Handling

Allocation:
Direct loading manpower, i.e. the cost of staff directly involved in loading operations: direct assignment by product (but not by transport type)
Other packaging costs: These are:

• • Support staff or staff not directly involved in the loading operations
  • Maintenance costs of specific bulk loading equipment (which therefore do not form part of the production cycle)
  • Work performed by machinery from the handling service
  • Work performed by other support services of the production site
  • Cost of utilities involved
  • Fire insurance
  • Other various costs

The allocation is made in proportion to the direct loading manpower. Remarks:

• • • Primary costs that can easily be assigned to the various products are allocated immediately.
    • The costs for loading bulk products include de-bagging costs of packaged products for bulk loading.

The recipients are the various PIF under MAGA.
196External non-commercial platforms
These are logistics platforms outside production plants, generally subcontracted (i.e. managed by third parties but under the responsibility of the production site), and intended to offset the lack of storage and/or packaging capacity on the production site.
Note that in Sales system, these logistics platforms are characterized by the fact that products stored there are not yet allocated to a specific market and are consequently included in the dynamic management of inventories.
Group(s) of activities under the same cost driver:

• • Packaging of bulk products or repackaging of packaged products
  • De-bagging of packaged products for conversion to bulk
  • Warehousing and loading for dispatch of packaged finished products
  • Loading for shipment of bulk products
  • Shipment of finished goods to customers or to a logistic or commercial platform

Remarks:
In addition to the costs of the various activities mentioned above, the following transport costs of finished goods are included:

• • From the production site to the external warehouses (614.5)
  • Among external logistic platform

Inversely, packaging or repackaging costs of finished goods to record under this C/C do not include the cost of the container, i.e. the packaging itself that is directly allocated to the C/C "finished goods packaging department" ([193|]).  
*Allocation{*}:
The method for allocating these costs by activity/product/packaging type can be designed in various ways depending on the detail level of information to be provided by the subcontractors responsible for running these logistic platforms. See the various hypotheses mentioned in [appendix A|]. Note: The various hypotheses mentioned do not apply to transport to and among logistic platforms, these latter being normally reported by product/packaging type.
 Remarks: 

• • Transport costs of bulk products to the external non-commercial platforms keep the axis "bulk" for the transfer within Cheops (MAGA), even if the product in question is intended to be repackaged in the platform.
  • The choice exists:
    • To create a sub-C/C by external logistic platform

    • To group all these platforms under a single common C/C. However, this solution can only be considered if the type of information available for each of the platforms involved is identical, meaning that the same hypothesis among the 4 mentioned in [appendix A|] can apply to all these platforms.

With the exception of any work invoiced to third parties or Group companies, costs accounted for here are allocated at the end of the month:

• • To the cost prices "finished goods packaging department" for costs corresponding to this activity
  • To the Cheops heading MAGA "plant storage and loading costs", and, in accordance with the required axes (particularly the packaging type) for the other costs, including transport costs to or among logistic platforms.

197Commercial platforms
They relate to external platforms that are generally subcontracted.
Unlike logistic platforms, the products stored on commercial platforms are already assigned to a market and are therefore not integrated into the consolidated management of dynamic stocks in sales system.
Group(s) of activities under the same cost driver:

• • Packaging of bulk products or repackaging of packaged products
  • De-bagging of packaged products for conversion to bulk
  • Warehousing and loading for shipping packaged finished goods
  • Loading for shipping bulk products
  • Shipment of finished goods to customers (or possibly to other commercial platforms)

Remarks:

• • In addition to the costs of the various activities mentioned above, the following transport costs of finished goods are included: from the production site to the commercial platforms + among commercial platforms (probably rare).
  • Packaging or repackaging costs of finished goods to be recorded under this C/C include the cost of the container, i.e. the packaging itself.

*Allocation{*}:
The allocation by activity/product/packaging type, other than the cost of the packaging itself, can be designed in various ways depending on the detail level of information to be provided by the subcontractors responsible for running these commercial platforms. See the various hypotheses mentioned in [appendix A|]. Note: The various hypotheses mentioned do not apply to transport to and among logistic platforms, as well as to the packaging cost itself; these latter being normally reported by product/packaging type.
Remarks:

• • Transport costs of bulk products to the commercial platforms keep the axis "bulk" for the transfer within Cheops (DEPOT), even if the product in question is intended to be repackaged in the platform.
  • The choice exists:
    • To create a sub-C/C by commercial platform

    • To group all these platforms under a single common C/C. However, this solution can only be considered if the type of information available for each of the platforms involved is identical, meaning that the same hypothesis among the 4 mentioned in [appendix A|] can apply to all these platforms.

With the exception of any work invoiced to third parties or Group companies, costs accounted for here are allocated at the end of the month under [DEPOT|http://teamsites.solvay.com/sites/DCFI-CC-GAC/Financial%20Reporting%20Manual/TRDEC.aspx] "warehousing costs", and in accordance with the required axes (particularly the packaging type).
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*19x<ac:structured-macro ac:name="anchor"><ac:parameter ac:name="">ANNa</ac:parameter></ac:structured-macro> APPENDIX A - Allocation methods according to various hypotheses*
*These hypotheses refer to the C/C* [{*}191*|]{*},* [{*}196*|]{*}, and* [{*}197*|]{*}.*
*_1st hypothesis:_*
The platform staff records its work both by activity (packaging, warehousing and loading of packaged products, loading of bulk products, shipment) and by product. This allows:

1. to assign staff costs both in terms of activities and products
2. to allocate other shared distribution costs by activity and by product on the basis of staff costs.

2nd hypothesis:
The platform staff records their work by activity and not by product. This allows:

1. to assign staff costs to the activities
2. to allocate other shared distribution costs by activity on the basis of staff costs.

In this case, the allocation by product is done on the basis of:

• • Quantities handled (possibly with coefficients) for packaging, warehousing and loading of bulk and packaged products,
  • The number (possibly with coefficients) of shipping vouchers, for the cost of the "shipping" activity.

3rd hypothesis:
Only quantities packaged as well as quantities that have been stored, loaded or shipped are available by product.
All costs are allocated by activity and by product on the basis of quantities handled (with coefficients).
The coefficients exist in a table providing the relative importance of operating costs for the various activities/products, taking as basis for example the loading of packaged PVC in bags on shrink-wrapped pallets.
The relative importance of each "activity/product" concept can be established on the basis of the time required for the work to be performed on each of these concepts.
4th hypothesis:
The platform staff records their work by product and not by activity. This allows:

1. to assign staff costs to each of the products
2. to allocate other shared distribution costs by product on the basis of staff costs.

In this case, the allocation by activity, within each product, is done on the basis of quantities handled (packaged, handled, loaded, etc), with coefficients. The coefficients providing the relative importance for packaging, warehousing and/or loading must be determined for each product.
SFTA - SECTION OF ADMINISTRATIVE AND MISCELLANEOUS OVERHEADS
16ADMINISTRATIVE FUNCTIONS
161Information system and Technology
In addition to Management and its secretarial staff, this C/C covers the activities and expenditure relating to:

• • IS network, i.e.:
    • Business data processing,
    • Telecommunications (voice and data), other than the telephone operators reported under C/C 162,
    • Office automation (including help desk).
  • Various projects,
  • Applications (development, availability, coordination and maintenance of the information processing systems),
  • Technology.

Allocation:
SIS services (SIS pricing).
For ERP costs invoiced by SIS, please note the following:

• • The flat rate, invoiced to the production sites, is computed by entity/division. Its allocation should follow consistent principles throughout the Group. Based on appraisals on SIS costs for the various ERP modules, the following allocation rule has to be applied: 100% below gross margin allocated to FATA of the related division. Nothing is to be reported under AUFLV.
  • Services invoiced by user: The allocation applicable to the variable portion of ERP pricing is charged to the final user (FATA, production costs, R&D, etc …).

Telecommunications (voice and data): Allocation to cost centers, based on the cost driver "number of telecom devices installed", using an annual fixed price.
Visio-conference: Allocation to cost centers, based on the cost driver "headcounts", using an annual fixed price.
The data processing costs, as long as they do not relate to manufacturing activities, and the business data processing projects, as non-recurring costs, are charged to FATA. The data processing costs that relate to manufacturing activities are charged to the cost prices.
162 Management and miscellaneous administrative services

• • • General Directions others than Sectors and other than those specifically reported under other C/C
    • Plant Management, Regional Directions and their secretarial staffs
    • Institutional relations (official representations, professional organizations, etc): Linked to Public Affairs and as such moved to C/C 166.
    • International Business Services.

Current allocation:
The services are charged by pricing. The support to the users is re-invoiced to the applications users concerned. For the Management of multi-divisions plants, the portion corresponding to the BU representation on the site will be part of FATA, the portion of technical coordination remaining at cost prices of production level (except the ATU - Technical Assistance to the Plants - from NOH, reported under RECH).
The other Managing staffs are normally charged to FATA.
Allocation:

• • • General Directions + Plant Management, Regional Directions and their secretarial staffs: Allocation to cost centers, based on the cost driver "headcounts", using an annual fixed price.
    • Management of fixed assets:
    • Land management: Allocation, based on the cost driver "Acquisition Book Value" whenever available, using an annual fixed price. If the driver "Acquisition Book Value" is not available, the driver to be used is "time sheeting budgeted".
    • Building management: Allocation, based on the cost driver "time sheeting budgeted", using an annual fixed price.
    • International Business Services (IBS): Allocation based on their activity types.
    • ATU - Technical Assistance to the Plants - from NOH: reported under RECH.

163Finance & Corporate Development

• • • Finance Management + secretarial staff
    • Financial and cost accounting (closing activities, valuation of finished goods inventories, set-up of cost prices of production, reporting, verification/assignment and payment of debtors invoices)
    • Cash management
    • Credit management
    • Controlling
    • Audit
    • Tax activities
    • Corporate Development

Allocation:
100% reported under FATA in all cases
164Personnel administration service

• • • Management and its secretarial staff
    • Organization, coordination and supervision of the various activities within the framework of the personnel strategy
    • Personnel administration (payroll, management of the presence/absence, legal formalities and all administrative work related to the personnel)
    • Expatriates management
    • Liaison activities of Industrial Relation Officers with personnel, management, trade-unions and accounting (excluding personal cost of employees being work council representatives *)
    • Selection and recruitment
    • Activities related to teaching and training of staff: Technical and professional training (salaries + lodging/traveling of trainers, meeting rooms, various supplies, participation of the employers in the effort of continuous training, etc). Excluding expenditures related to trainees and apprentices *.

• Personal cost of workers representatives, trainees, apprentices, are preferably reported in the cost center of their department. If not possible, should be reported in cost section 173 (social benefits).
  Allocation:
  All HR costs (sum of local HR structure related costs and HR costs coming from SSC's) are allocated to cost centers, based on the cost driver "headcounts", using an annual fixed price. All headcounts are taken into consideration (production, logistics, administration, commercial, research).
  165Legal
  • • Prevention activities (respect of laws and settlements as well as ethic and code of good behavior)
    • Management of litigation (proposal and assistance with setting-up of legal solutions within the framework of discussions and conciliation)
    • Preparation of Boards of Directors and General Board Meetings
    • Legal guidance related to transfers, acquisitions, merging and reorganization into subsidiaries
    • Legal treatment of rejects
    • Permits to run an exploitation

Current allocation:
Allocation to the recipients on the basis of preset tariffs (or based on fixed prices for the recurring activity). Costs are charged to the cost prices of production or to FATA according to the type of services. The cost driver used for invoicing is the tariff per man/day.
Allocation:
The allocation is based on man/days charged to the requesting party. Normally it ends up with 100% under FATA.
166 Communication

• • • Tasks of defining and distributing the policies of internal and external communication
    • Centralized maintenance of advertising budgets, should this arise
    • Institutional communication
    • Business communication

Current allocation:
Allocation to the recipients on basis of preset tariffs (or based on fixed prices for the recurring activity). The business communication is allocated by pricing to FATA. The cost drivers used for invoicing can be the following:

• • Manpower concerned (institutional communication - e.g.: report on environment, etc)
  • Man/days (business communication)
  • All manpower (communication service)

Allocation:

• • • Institutional communication: Allocation to cost centers, based on the cost driver "time sheeting budgeted", using an annual fixed price.
    • All other groups of costs: Allocation to cost centers, based on the cost driver "headcounts", using an annual fixed price.

167Total Quality
Covers the activities of the TQM coordinator, of his service (improvement of quality), of the external consultants he may require.
The TQM coordinator:

• • • Advises the Regional Director or the Director of the site in the setting-up of TQM/insurance quality policy
    • Manages the processes of setting in certifications and the maintenance of certifications acquired
    • Directly intervenes in the step of continuous improvement which he attempts to promote

Allocation:
Allocation to the beneficiaries (including production costs when related to manufacturing, based on the cost driver "time sheeting budgeted", using an annual fixed price.
168Support services for Holding and financial entities
Is the equivalent of 187 for commercial entities.
Allocation: 100% to FATA to the divisions.
169Technical services of DCRT

1. Spot support to a production site for solving technical problems. Generally this support is subject to an order-invoice specific to the related BU or SU (ETC = Studies and Work in process {in French = Etudes et Travaux en Cours}).
2. Process activities or specific technological activities.
   • Studies for the improvement of manufacturing process, of their control, of their materials, etc
   • Miscellaneous studies (discussion with competitors, studies of potential purchases, due diligence, etc)
   • Studies prior to investments projects (pre-studies leading to a record in the Plan).
3. ATCO (Common Technical Assistance {in French = Activité Technique Commune}). This relates to technological activities common to the BU as a whole (general services, environment and security, technical information systems, etc).
4. Support to research.
5. Guidance of big construction projects: specific contracts (ETC).
6. International Purchasing Management (DIA).

Allocation:
1 = Cost prices (CDV); 2, 3, and 6 = FATA 4 = RECH; 5 = Fixed assets (IMCOR).
17MISCELLANEOUS FUNCTIONS
173Social benefits (oeuvres sociales)

• • • Activities and expenditure relating to the various infrastructures:
    • Accommodations that are the company's property and related activities (maintenance, accommodations rented, loans for accommodations,…), i.e. houses in factories, …
    • Various company benefit scheme (canteen, drink distributors, library and other leisure)
    • General teaching : intervention in study costs of personnel (excluding expatriates for whom school costs are part of personal costs), school allowances to the children of the personnel staff, school transports, etc.
    • Jubilee related costs
    • Personal cost of workers representatives, trainees, apprentices, are preferably reported in the cost center of their department. If not possible, should be reported in this cost section 173.

Allocation:
Allocation to cost centers, based on the cost driver "headcounts", using an annual fixed price. All headcounts are taken into consideration (production, logistics, administration, commercial, research).
174 General services – facility management
Includes expenses relating to shared installations (exploitation and maintenance of the central building, parking places, roads, lighting, etc)
Allocation:

• • • Common installations (Roads, lighting, sewers): Allocation to cost centers, based on the cost driver "Initial Value (VI) of the running production equipment", using an annual fixed price.
    • Costs related to providing facilities to the persons (Buildings, offices, parking) and related costs (cleaning, maintenance, renovation): Allocation to cost centers, based on the cost driver "headcounts", using an annual fixed price.

Remark: For external services that are directly provided to the beneficiaries (e.g.: taxis, meal), the costs are charged to the related cost centers.
SFGT - SECTION OF TECHNICAL OVERHEADS
10MAINTENANCE & CONSTRUCTIONS
104Engineering (Study office)
Activities of designing and carrying out fixed assets projects, maintenance, research and development, clearance and demolition projects, etc, including:

• • • General preliminary or feasibility studies in the context or not of a budget request
    • Studies and performance of fixed assets (normal or special budget), maintenance, clearance and demolition projects, etc
    • Administrative management of the engineering service
    • Services provided to third parties
    • External engineering service operating on the request of a study office of the production site
    • Technical control: fix Assets management (technical inventory) and investment bugeting.

Group(s) of activities under the same cost driver: All activities or costs mentioned above.
Allocation:
The full cost of the engineering service, in addition to its registered personnel, includes the cost of temporary personnel or external personnel under the control of a personnel member. It also includes the cost of external studies, provided they relate to work for which the final responsibility is under the engineering service of the production site.
The full cost of the engineering service is based on services performed by registered personnel and non-registered personnel of this service (real hours worked assigned to a real hourly cost, increased to take into account the own number of hours of the engineering service).
In some exceptional cases, and with the approval of the engineering supervisor, study costs totally given to external offices taken full responsibility are directly allocated to the receiver PU/SU without flowing through this C/C.
The proportion of the cost of the engineering service is included in each of the relevant receiver C/C when activities relate to production or maintenance.
105Maintenance
WOKSHOPS
Activities of all workshop personnel, i.e.:

• • • Personnel performing its work on sites
    • Personnel running the logistics
    • Supervision

and involved in activities such as mechanical, building, construction, chemical products, electricity and Instrumentation (AMRA)
For some sites, a difference must be made between the AMRA proportion and the IS proportion included elsewhere in the C/C "information system and technology".
Remarks:
Sub-C/C workshops can be opened if necessary (e.g. in Rb: Building workshop, railway workshop, etc)
Work at fixed prices does not flow through this C/C and is treated as maintenance "external services" of the relevant receiver C/C.
Group(s) of activities under the same cost driver:
Within the same group of homogeneous activities (i.e. the workshops taken as a whole or for each type of specialized workshop: mechanical, construction, instrumentation, electrical, etc):

1. Work performed by personnel clocking in and out (registered or not) and other services identified (workers, employees and support staff members assigning their activity to a C/C).
2. Non-identified work by support staff members ensuring the technical and administrative logistics, as well as the other operating costs (including lighting, heating of the premises, utilities, depreciation, etc).

Allocation:
All activities 1) and 2) together are allocated based on hours invoiced by activities 1) at a cost, increased to take into account the own services of the workshops. Besides the activities charged to fixed assets and services provided for third parties, they are allocated via the C/C "maintenance" as:
Registered workers: Wages
Employees and identified registered support staff members: Salaries
Non-registered personnel
Supervision and other operating costs (incl. personnel running logistics)
Remark: The cost of using handling machines in the frame of maintenance activities is directly assigned to the receiver C/C, without flowing through the C/C "workshop".
OTHER EXPENDITURES
Collects:
Costs involved in maintaining installations, machines, material, and furniture in good condition, as well as the repair costs, allowing their optimal use until the end of their normal life.
Costs involved in overhauling old installations.
Any replacement of part in the broad sense of the term (mechanical, electrical, instrumentation, painting, etc) by another part identical or very similar to the original.
Refer to the note 2000-011-PPandE-E for the treatment related to maintenance costs to capitalize or to expense.
Group(s) of activities under the same cost driver:
Group 1: Hours of work performed:

• • Maintenance activities provided by registered personnel: (wages and salaries).
  • Maintenance activities provided by non-registered personnel: (external personnel).
  • Use of handling machines during maintenance activities

Group 2: Costs invoiced:

• • Purchases of any equipment necessary for the various maintenance activities
  • Maintenance activities sub-contracted to external companies, on the basis of contracts or spot orders. Whenever possible, the proportion of the "external services" personnel is to be included in the non-registered personnel.

Group 3: Stock issues from procurement stores.
*Allocation{*}:
Group 1: Direct assignment to the receiver C/C on the basis of hours of services performed, possibly by category (in accordance with the rule indicated under the C/C "workshop". This formula does not exclude introducing contracts on the basis of agreements between parties.
Group 2: Direct assignment to receiver C/C based on invoices.
Group 3: Stock issues based on the contracts existing for the groups 1 and 2
\\
 *11HANDLING & TRANSPORT*
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<ac:structured-macro ac:name="anchor"><ac:parameter ac:name="">cc110</ac:parameter></ac:structured-macro>{*}110Shared equipment*
Garages, greasing bay and fuel distribution station for common use during handling and transport.
Remark: The costs of the weighing bridge allocated to the shipping department are assigned to the C/C "shipping department" ([192|]).
*Allocation{*}:
Garages and greasing bay: Forecast costs, adjusted if necessary during the year, are assigned to the receiver C/C on the basis of the number of maintenance hours of the vehicles involved, according to the formula:
Planned cost / number of hours scheduled for the maintenance of the vehicles = forecast hourly cost x actual number of hours of vehicle maintenance
Fuel distribution station: allocation based on the quantities of fuel distributed. The difference between the sum of actual costs and the sum of planned costs is allocated during the year on the basis of actual costs accounted for.
\\
<ac:structured-macro ac:name="anchor"><ac:parameter ac:name="">cc111</ac:parameter></ac:structured-macro>{*}111Automobiles, trucks & handling vehicles*
Collects costs related to machines run by a centralized service ([110|]) of handling and transport of persons and goods inside or outside the production site. *The C/C includes the management of handling vehicles{*}.
*Group(s) of activities under the same cost driver{*}:
The monitoring of operating costs (drivers' wages, fuel, servicing costs, depreciation, proportion of shared equipment, etc) is done at the level of the cost accounting, not by individual machine (*), but by homogeneous types of vehicles and machines, and by distinguishing the machines supplied with driver from those that are not.
(*) The monitoring of maintenance costs for each machine can be done using the detailed description contained in the C/C "maintenance" ([105|]).
*Current allocation{*}:
All machines managed by the "handling and transport" service are assigned to the beneficiaries in proportion of the actual number of hours of use (monthly grid by homogeneous type of machines), and according to the planned hourly rates, adjusted where necessary, and calculated according to the formula:
Planned cost / number of hours scheduled for vehicle maintenance = forecast hourly cost x number of hours of actual vehicle maintenance.
The forecast hourly rates are adjusted during the year so that, at the end of the financial year, and whenever possible, all the costs allocated to this C/C are assigned to the beneficiaries.
Remarks:

• • The cost of machines managed by other services does not flow through this C/C. The costs of a machine entirely devoted to a C/C are allocated in full to it. E.g.:
    • Fire trucks and other vehicles exclusively used by the fire service
    • Vehicles belonging to the civil protection service
    • Medical service ambulance
    • Vehicles, trolleys, lift-trucks and other handling machines in warehouses, shipping department, etc
  • In order to ensure the homogeneity and reliability of the hourly cost of each machine or family of machines, it is imperative:
    • To create distinct homogeneous groups for, on one hand, machines supplied to the users with driver, and, on the other hand, machines supplied without driver.
    • That the number of hours worked by drivers or operators assigned to each of the homogeneous groups of machines should correspond to the number of hours used by each of the categories of machines.

  • The cost of work performed by the handling machines, as part of maintenance activities will be directly assigned to the receiver C/C without flowing through the C/C "workshops" ([105|]).

Allocation revised:
The above allocation methods are still valid. However, for sites with few common vehicles, an allocation, based on the cost driver "time sheeting of budgeted vehicle usage", using an annual fixed price is recommended.
When the cost of management is not included in the vehicles' pricing, it is recommended to use an allocation, based on the cost driver "time sheeting", using an annual fixed price.
112Internal railroad transport
Operating and maintenance of the infrastructure and means of internal rail transport, including connections to the national network, as well as relevant weighing methods.
Group(s) of activities under the same cost driver:
Maintenance and control of the following equipment: Motorized tractors for moving purposes, railcars inside the production site up to the network + their garages, railcars remaining on the production site, infrastructure, railroads, signals, weighing devices
Use of this equipment for transport and handling.
Allocation:
The costs of the 2 groups of activities are allocated based on the cost driver "budgeted transported tons", using an annual fixed price.
113External railroad & river transport
Transport of materials by railcars (including iso-tankers), by barge or riverboats that are the Group's property, used for transporting goods outside the production site, and the related maintenance.
Remark: The costs of this transport, using rental railcars or boats and that are invoiced by third parties, will be directly allocated to the relevant C/C or reporting headings (warehouse of raw materials or fuel, transport costs of products sold, etc)
Group(s) of activities under the same cost driver:

• • • External railroad transport and river transport for mono-products
    • External railroad transport and river transport for multi-products
    • separating external railroad transport from river transport.

Allocation:
For mono-product: Direct allocation to the receivers of the product transported (warehouse of raw materials or trading goods, transport of products sold, etc).
For multi-products: Direct allocation to the receivers according to a key set up by this C/C manager.
TRANSPORT COSTS OF FINISHED GOODS

\\
<ac:structured-macro ac:name="anchor"><ac:parameter ac:name="">cc116</ac:parameter></ac:structured-macro>{*}116Fixed equipment for handling raw materials, fuel & finished goods*
Operating of fixed equipment (cranes, bridges, gates, aerial pipes, quays, piers, etc) for loading or unloading raw materials, fuel and finished goods. 
*Group(s) of activities under the same cost driver{*}:
Sub-C/C by equipment / material.
Relevant activities including the maintenance and inspection of fixed equipment as well as the use of fixed equipment.
Remark: The costs related to transport by pipes are included in the C/C "pipes" ([117|]).
*Current allocation{*}: 
Operating cost for each equipment is allocated:

• • In the case of exclusive use, to the relevant PU/SU.
  • In the case of shared use, to the relevant PU/SU on the basis of the tons handled.

Allocation:
In the case of shared use, an allocation, based on the cost driver "budgeted handled tons", using an annual fixed price is recommended.
117Pipes
Operating and maintenance of underground or aerial pipes outside the site but going up to distribution station of the production site for products mentioned below. The C/C includes the management of pipes.
Group(s) of activities under the same cost driver:
This C/C is broken down into as many sub-C/C's as there are pipes.

1. Pipe systems for single products, i.e. fresh water, residual water, raw brine, purified brine, DS liquid, naphtha, hydrogen, ethylene, nitrogen
2. Multi-products pipes

Remark: pipes used for transporting residues (waste into the sea, etc) are not included in this C/C, but are reported as environmental costs.
Allocation:

1. Costs of pipes used for a single product are assigned to receivers on the basis of the quantities taken.
2. Costs of pipes used for multiple products are assigned on the basis of time used / product.

If there is a contract between the homogeneous activity and its customer, this is set up in proportion to the quantities taken and used by the customer.
Remark: In the case of partial or extended shutdown, or cessation of supplies to a customer, the costs will be reported as "shutdown costs".
Allocation for the management of pipes:
Allocation, based on the cost driver "time sheeting", using an annual fixed price.
12 HSE
This applies to sites concerned by the HSE cost center structure.
The sites NOT concerned by the HSE C/C structure should nevertheless be as close as possible to that structure.
Foreword:
The same cost center codes are to be used for current expenditures (which generally end up in production costs) and expenditures related to the past.
The cost price items that are mentioned below, and where the costs are to be reported, refer to the cost price layout.
Rules:

1. CURRENT EXPENDITUREs common to several production units (production costs)

A cost center should be used every time possible for these activities so that costs can be allocated between the different beneficiaries. In particular for:

• • HSE departments,
  • sewerage networks including neutralization,
  • biological treatment units.

The costs charged to the cost centers will be allocated (most often by pricing) to the different production units and/or cost centers that use this activity. In their production costs reports, the production units will then show their share of the total amount under items 5.3 'HSE'.

1. CURRENT EXPENDITUREs specific to a single production unit (production costs)

With regard to effluent treatment units linked to a single production unit, an environment cost center will be used only if it involves significant expenditures and this, only in agreement with the BU/R&T concerned. This relates, for example, to the Solox (RB) unit and waste water biological treatment units.
In their production costs reports, the production units will show the costs under item 2.4 'Environment BU' or 5.3.0 'Environment' (depending on whether the management of the treatment plant is under the responsibility of the production manager or of a service unit, such as the environment department).
The costs linked to small units such as strippings, UTEG (Unité de Traitement pour Effluents Gazeux), absorptions, bag filters, flocculations and demercurisation units, should be accounted for directly in the main production cost center of the corresponding production unit.
The sites which want to follow the costs relating to a specific activity by means of a cost center can do this as an exception by managing this cost center by detailed distribution (or an equivalent allocation structure). This allows keeping unchanged the nature of the costs on the production cost centers.

1. PAST CHARGES (not in production cost reports)

Unlike current expenditures which end up in the production costs, past charges (e.g. historic pollutions) require special treatment:
If environmental provisions have been constituted in relation to these charges, and after agreement from the BU and DCRT-HSE on the expenditure, the costs will be charged to one or more cost centers specific to the provision. The short text of the costs centers will include the identifier for the provision defined by DCRT-HSE. More information on the management procedures for HSE provisions.
If not, they will be charged to a cost center settled to CPNFO or AREX depending on whether they are recurrent items or not. On this topic, the approval procedure for non-recurring items is to be referred to.
Standardized coding of HSE Cost Centers:
Cost centers relating to HSE activities, which must meet one of the criteria included in points 1 to 3 above, will be coded according to the rules listed in the tables below. Comments:
The « X » in the table corresponds to a choice of letters. This allows several CC to be created for the same type of activity if necessary.
With regard to the 3 positions following the code 126/127/128:

• • for a CC relating to an activity common to several production units (see rule 1): use the code « 000 ».
  • for a CC specific to a single production unit (see rule 2): use the first 3 characters of the production cost code.
  • for a CC specific to a past charge (see rule 3): use the first 3 characters of the production cost code if possible, if not "000".

As usual in SAP, the codes below will be preceded by the 2 positions identifying the establishment.
Furthermore, we insist that the text adopted for the cost centers be understandable to people outside the site.
Note:
Unless otherwise indicated, all of the relevant operating costs will be charged to HSE cost centers, i.e.: personnel, maintenance, purchase of goods and services, utilities and depreciation costs, and, if applicable, the shared services (pricing).The preferred cost tracking template is the one used for the production cost reporting.
126Environment
Nomenclature of cost centers:

Comments:
(1) Environment department: Includes:

• • Local environment department personnel costs
  • Training
  • Department's operating costs.
  • Costs of environmental studies for the site (impact assessments, audits, …).
  • The costs of environmental analyses (laboratory) that cannot be charged to other (e.g. production) cost centers.

(2) Taxes
A cost center must be created for each type of environmental tax. The corresponding costs will then be allocated (detailed distribution) to the entities that pay the taxes (item 2.7.0 « Taxes » in the production cost report).
Note: Taxes included in the price of purchased raw materials and utilities (water, electricity, …) are of course not concerned by these cost centers. Land taxes are also to be excluded.
(3) Waste, by-products
As for waste in the strict sense, a cost center will only be created for the management of waste common to several production plants (used oil, municipal waste, ...).
The invoices relating to the waste sent outside for treatment should be allocated to cost element 6122040000 « Services for Waste treatment » (Group chart of accounts). As regards waste that is specific to a production unit (mercury, …), invoices should be allocated directly to the related production cost center and shown in the production cost reports under item 2.4 « Environment (BU) ».
The costs of the registered personnel in charge of waste management are still charged as operating personnel costs for the relevant production and environment departments.
Note: waste must not be confused with by-products. By-products are secondary materials transferred from one production unit to another for recycling in the form of saleable products. For example, organo-chlorine residues transferred to the UTEL (Unités de Traitement pour Effluents Liquides) where they are used to produce HCl and steam . These by-products are to be charged to item 1.4 "Miscellaneous recoveries".
Reminder: UTEL are covered by the production cost 32563620 and not by an environment cost center.
Environmental laboratory costs
The costs of laboratory analyses for environmental reasons should:

• • come from laboratory cost centers (cost centers 141).
  • be charged to one or more cost elements specific to environmental analyses, which easily allows the cost to be identified (in the SAP system ERP SOLVAY: 9141E00001 = at cost, 9141E00011 = fixed price - global distribution, 9141E00022 = unit price - activity type).
  • end in items 2.4 'Environment BU' or 5.3.0 "Environment" of production cost reports (not in items « Quality Control »), possibly going through an environmental cost center.

(4) Miscellaneous environment
The cost centers bearing the heading « Miscellaneous environment » allow for miscellaneous environment activities to be grouped together, thus preventing the creation of a large number of cost centers for small amounts. However, they should be avoided, as they are non-specific.
127Safety, hygiene

Comments:
(1) Safety and hygiene department
This includes personnel safety awareness and training services, together with plant safety management services. The following are grouped under this cost center:

• • Salaries of the site personnel responsible for safety and accident prevention, excluding firemen, unless they give training
  • Costs of safety/health studies for the site (Seveso, audits, …)
  • First-aid training
  • Costs or fees (internal and external)

It does not include the PPE (Personal Protective Equipment), the cleaning of work clothes, showers and changing rooms.
(2) Fire department

• • All activities by the firemen, including their training, with the exception of training given as part of « personnel and plant safety » activities
  • Fire department personnel and equipment.

Note: detectors, sprinklers, water curtains and intercoms are included in the cost of the related installations (PU/SU).
(3) Site security
Activities and resources implemented to provide site security, including: guards, fences, guards' lodges, doors and access grilles, security devices, TV, radars, etc.
128Health

Comments:
(1) Occupational medicine

• • Sick bay/dispensary
  • Occupational medical services:
    • Doctors', nurses' and medical secretaries' salaries
    • Contributions to inter professional medical services
    • Specialists' fees and analysis costs for examinations prescribed by the works doctor
    • Costs relating to the prevention of occupational illnesses
  • External medical services
  • Ambulances
  • Training

It does not include social medicine nor social welfare, which are under the responsibility of the personnel department.
13PURCHASING & PROCUREMENT STORES
131Purchasing
Procurement activities of the site, in goods and in services, including:
Preparation, consultations with suppliers, analysis of offers, and purchasing procedures (incl. orders and follow-up) of:

• • Raw materials and energy products, packaging, chemical products;
  • Equipment for civil and mechanical engineering, electricity, instrumentation, information system and technology, etc, for maintenance and fixed asset budgets
  • Rents (machines, external manpower, etc) and outside contracts
  • Other purchases
  • Purchases for procurement stores and others (general store, spare parts, piping, etc)
  • Repairs (orders, etc)
  • Miscellaneous purchases, supplies, etc
  • Training, translation, etc
  • Purchase of trading goods
  • Various sales (ironware, pallets, paper, etc)

Validation of invoicing discrepancies, additions, etc
Group(s) of activities under the same cost driver: All activities or costs mentioned above.
Allocation:
Allocation to the final beneficiaries of the amount corresponding to the service provided by the C/C purchasing. That amount is based on the % of the movement value and/or a fixed amount per movement.
132Procurement stores
Activities related to the receipt, storage, management and distribution of items from the general warehouse, i.e.:
Receipt, distribution and management:

• • Of procurement stores (general warehouse, spare parts warehouse and construction warehouse, etc)
  • Of all or part of the raw materials and packaging stores, assuming their management is not directly controlled by the receiver PU/SU, but is centralized.

Certain differences between invoices received & invoices to be received, i.e.:

• • Insignificant differences
  • More rarely, larger differences when the allocation to inventories or to the receivers is difficult to set up

Small accessory costs, common to several items intended for warehouse
Group(s) of activities under the same cost driver: All activities or costs mentioned above.
Allocation:
Allocation to the final beneficiaries of the amount corresponding to the service provided by the C/C procurement stores. That amount is based on the % of the movement value and/or a fixed amount per movement.
Allocation specific to common raw materials and packaging warehouses: Allocation, based on the cost driver mixing quantities and values of items in warehouse, using an annual fixed price (case of Tavaux).
14LABORATORIES / COMPLIANCE
141Laboratory (quality control)
The objective of the laboratory is to meet the needs for physics and chemicals analyses of the site. A contract defines the services provided by the laboratory and the relationship between customers and suppliers. The services may include:
Analytical controls of production and other operating services (environment, hygiene at work, research, technical assistance to customers, etc)
Management of on-line analyzers (even if the instrumentation service or production personnel is in charge of it).
Technical help and assistance to manufacturing (training, various tests, etc)
Group(s) of activities under the same cost driver:
The creation of a homogeneous activity is to group a series of activities to ensure a relevant identification of their cost and their allocation method.
Because of the diversity of the sites and of their organization, it is not possible to propose a shared homogeneous activity for all sites. As example, the following homogeneous activities can be identified:

• • Interface group (sampling, preparation, publication of results, etc)
  • Support group (chromatography, spectroscopy, etc)
  • On-line analyzers
  • Plastics analyses
  • Organic products analyses

Costs that cannot be directly assigned to other homogeneous activities of the laboratory will, if necessary, be grouped in an activity "shared costs", that can include:

• • Building maintenance, except specific equipment (e.g.: Hydrogen distribution network à receiving activity - gas phase chromatography)
  • Staff training and associated traveling, if they are of a general nature
  • Utilities (de-mineralized water, electricity, compressed air, etc) except high levels of heterogeneity in the consumption of homogeneous activities
  • LIMS
  • Staff costs that cannot be directly assigned to any homogeneous activity other than "shared costs"
  • Insurance
  • Straight-line depreciation that can not be assigned to other homogeneous activities

Allocation:
Laboratory costs are invoiced based on an allocation rule negotiated between a customer and a supplier and documented in a contract. This contract describes the services required (type, frequency and quality level of services), the cost of services and the relationship between the customer and the supplier (duration of contract, amendments, variability, invoicing method, etc.).
The contract makes the distinction between:

• • Scheduled analyses (routine or according to an inspection plan): the contract specifies a contribution corresponding to laboratory costs. The customer specifies in September-October the type and number of analyses he plans for the following year and the laboratory estimates the annual amount to be paid on the basis of operator time, his unit cost and related costs.
  • Non-scheduled analyses (non-routine): the contract specifies an hourly cost estimate integrating related costs

According to some criteria, the pricing rule is the following: sum of actual number of analyses multiplied by the tariff. The criteria can be:

• • Number of customers
  • Size of the laboratory
  • Needs expressed by the customers
  • Type of site organization

The unit price of an analysis is calculated by multiplying the average hourly rate by homogeneous activity (integrating the related costs) with the running time estimated for each analysis. The hourly rate is equal to the total cost of the homogeneous activity, divided by the total estimated running time of the homogeneous activity (= number of analyses multiplied by the estimated operating time for this analysis). This implies the existence of a cost catalog.
The use of the pricing leads to a margin to be allocated according to a protocol defined in agreement with the site manager. If the origin of this margin is not positioned at the level of one or several specific customers, the margin could then be allocated in proportion to the contractual costs.
This pricing cannot be set up without a contract integrating notions such as:

• • Variability in the volume of services during the contract
  • Invoicing of surplus
  • Contract duration
  • Variability of renewal or cancellation of contract.

Remarks:

• • All receivers pay for the services they have requested. A contract is drawn up for customers where fixed costs can be anticipated (i.e. services requiring routine work and that have an inspection plan).
  • Depending on the customer's instructions, laboratory costs are allocated on inspection activities and on environment, ponds and embankments.
  • Note that analyses requested by the Technical Assistance to Customers (ATC) are invoiced and are part of the commercial costs.

Allocation:
The above allocation methods are still valid. However, it is recommended to use the types of pricing in the following order of priority:

• • Priority 1: Allocation, based on the cost driver "number and type of analyses", using an annual fixed price.
  • Priority 2: Allocation based on a unit rate per analysis.
  • Priority 3: Allocation based on a unit rate per hour.

SFAU - OTHER COST CENTERS OR COST OBJECTS
32Manufacturing & production
Group(s) of activities under the same cost driver concerning all production departments:
Management of the production/packaging areas
Production control according to quantity, quality (IPC) and cost effectiveness
Production planning and documentation
Cleaning and set-up of equipment
MPS-planners: They are responsible for

• • Checking and fine tuning the available resources in production with the product demand based on a 18 months rolling forecast. This is performed every month to level the demand in time and resources and to locate any problems concerning the availability of these resources.
  • Best forecast and year-budget figures (in quantities),
  • Maintenance of the production recipes in SAP and
  • Ordering of long term materials.

Other costs:

• • Allocation Support staff or staff not directly involved in production operations
  • Maintenance costs of equipment (building, machines, etc)
  • Work performed by facilities from the handling service (e.g. weighing center,
  • Work performed by other support services of the production site (e.g. Quality assurance, - control, energy supply, GMP-facility cleaning, etc)
  • Cost of utilities used
  • Fire insurance
  • Other various costs

Allocation:
General principle: Costs related to each of the products manufactured are assigned to the cost price of warehouse inputs of these products, including over-production.
2.1. Manpower directly related to production  Man hours in recipe
2.2. Manpower directly related to set-up & cleaning  Man hours in recipe
2.3. Machine power directly related to production  Machine hours in recipe
2.4. Machine power directly related to set-up & cleaning  Machine hours in recipe
2.5. Fixed Order Costs directly related to production  Number of orders in recipe (= 1)
2.6. Logistic costs directly related to production  Number of Bill of material (BOM) positions in recipe
324Production by Third parties
Subcontracting or toll manufacturing is the outsourcing of (a part of) the production process for API, IM and FPP.
Costs include:

• • Materials ( of BOM)
  • Expenses for subcontracting
  • Other direct attendant expenses
  • Tracking of the material consumption of the "subcontracted" phase in manufacturing is based on a standard BOM with standard material-consumption and also taking the yield / standard losses into account.