Product Line Accounting

Product Line Accounting
Or Category Accounting overview
Rajkumar Chockalingam
Copyright 2014, Oracle and/or its affiliates. All rights reserved.
Product Line Accounting Or Category Accounting

- Product line accounting (PLA) or category accounting is widely used in
manufacturing industries in order to account valuations based on product
/material categorizations.
- For example an organization may handle materials of type Steel, Rubber,
Plastic, etc. and it is possible to report the inventory / WIP valuations based
on the above categorization with the help of PLA.
PLA in E-business Suite:

Default WIP accounting classes based on PLA categories when converting
planned orders
Default WIP accounting classes based on PLA categories
when defining discrete jobs,
associating repetitive assemblies and lines
and when performing work order-less completions
Perform distributions using these default WIP classes accounts

Track WIP and inventory transaction valuations by PLA categorizations
3
Setups involved to implement PLA:

1) Define Item Category Structure
2) Define a Category Set

3) Define Categories
4) Associate default category set for Product line accounting functional
Area
5) Set up Default WIP Accounting Class for categories
6) Set Up Category Accounts
1) Define Item Category Structure

System Administrator -> Application -> Flexfield -> Key -> Segments -> Query title Item Categories
2) Define Category Set

3) Define Category Codes
Inventory -> Setup -> Items -> Categories -> Category Sets , Category Codes
4) Associate default category set for product line accounting functional Area
Inventory -> Setup -> Items -> Categories -> Default Category sets
To use category accounts

item needs to be
assigned with a category
of category set
associated with PLA
functional Area.
In this case Category set:
Accounting- DSS
Category Accounting
5) Set up Default WIP Accounting Class for categories

Cost Management -> Setup -> Account Assignments-> Category Default WIP Classes
- In Std Costing org WAC can

be assigned only to category
- In Avg Costing org WAC can
be assigned to Cost group /
Category combination.
6) Set Up Category Accounts

Cost Management -> Setup -> Categories -> Category Accounts
- In Std Costing org category accounts can be assigned for a sub-inventory and category combination
- In Avg Costing Org category accounts can be assigned for cost group and category combination.
completing set ups discussed above

It is possible to only default WIP accounting class in WIP docs
Category accounts defined for categories still can not be used.
PLA implementation is still Incomplete
10
to use Category Accounts
define and implement the Account Generation client extension
(Or)
In R12 use Sub-ledger Accounting (SLA)
11
Example : 1
12
Default WIP Acctg Classes in WIPDJMDF based on WAC category

defaults
Steps:
Create an Assembly (item-a) and associate PLA Category (DSS_Category1)
Create BOM & Routing
Create a WIP Accounting class
Associate WAC with PLA Category of assembly item
Create a Discrete job
Confirm WAC gets defaulted from category defaults and not from WIP parameter
13
Create an Assembly (item-a)
Associate PLA Category to assembly item (DSS_Category1)
14
BOM and Routing for assembly test-a
15
Create a WIP Accounting class

Associate WAC with PLA Category
16
Create a discrete Job

Confirm WAC defaults from category defaults.
The WAC for discrete job gets defaulted

from category defaults and not from WIP
Parameter.
WIP Accounting Class
17
WIP Parameter
SFM
Category Defaults
TEST_PLA
Example : 2
18
Derive PLA category accounts using client extension (Costing hook).

The solution is designed using costing hook
client extension CSTPSCHK .std_get_account_id
Organization: Standard costing org with no projects and no WMS enabled (Org
code:M5 & Org id :1642)
Logic: When the Accounting line type is 1 (inventory valuation line) fetch accounts
from category account assignment (MTL_CATEGORY_ACCOUNTS) else fetch
default accounts.
19
Create a Test Item and associate PLA Category
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Assign Category Accounts to PLA Category
Category
: DSS_Category1
Sub-Inventory : Stores
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Material Account: 01-000-1411-0000-000

Material overhead Account: 01-000-1421-0000-000
Note Accounts defined in Organization parameters and sub-inventory
Material Account
01-000-1410-0000-000
Material overhead Account 01-000-1420-0000-000
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Setup costing hook
23
contd.
- The extension is written on the costing hook

CSTPSCHK .std_get_account_id
This routine is used to determine the accounts
which are needed for posting inventory
transactions.
- Condition will fetch category accounts for
accounting line type 1 and sub-inventory code
Stores in Org M5.
- The category accounts will be used for all
items which has PLA category assigned and for
other items it will use default account.
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Create a Miscellaneous receipt txn and get it costed
Inventory Valuation Material A/c (01-000-1411-0000-000) is derived from Category accounts and
organization / Sub inventory material account (01-000-1411-0000-000) not used.
Inventory Valuation Material

Inventory Valuation Material ovhd
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Confirm results from back end

MTL_MATERIAL_TRANSACTIONS
MTL_TRANSACTION_ACCOUNTS
G
GL_CODE_COMBINATIONS_KFV
26
Example : 3
27
Derive PLA Category accounts using SLA without client extensions

The solution is designed using a custom AAD with seeded sources
Organization: Standard costing org with no projects and no WMS enabled (Org
code:M5 Org id :1642)
Product Line Accounting Category Material Account
Product Line Accounting Category Material Overhead Account
28
Create custom account derivation rules (ADR) using seeded PLA sources
Cost Management SLA -> SLA-> Accounting Setup-> Accounting methods Builder -> Journal entry
setups -> Account Derivation rules.
29
PLA Seeded sources
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Create Journal Line Definitions (JLD) and associate user defined ADR
Cost Management SLA -> SLA-> Methods and definitions ->Journal line definitions
- User defined ADR for JLT

Inventory Valuation alone
and rest all are seeded.
- The ADR will derive
Inventory Valuation Accounts
from PLA category
Accounting setups
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Create Application Accounting Definitions (AAD)

Associate User Define Journal Line definitions (JLD)
Cost Management SLA -> SLA-> Methods and definitions ->Application Accounting Definitions
- Assign custom JLD to miscellaneous event
class.
- To use PLA category accounts for other
Event Classes - respective JLD must need to
be modified.
- After creating custom AAD, validate AAD and
confirm validation status is Valid for all event
classes.
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Create Sub - ledger Accounting Methods (SLAM)

Associate AAD defined to application Cost Management
Cost Management SLA -> SLA-> Methods and definitions ->Subledger Accounting methods
SLAM: RC_STD_ACCRUAL
AAD: RC_PLA
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Assign SLAM to Ledger
Cost Management SLA -> SLA-> Methods and definitions ->Subledger Accounting methods -> Click on
Accounting set ups -> query and Update Ledger
Ledger: Vision Operations

SLAM : RC Standard Accrual
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Create a miscellaneous transaction and allow it to cost.
Valuation accounts derived as per

subinventory / org set up and not from
category accounts since costing hook
(client extension) is disabled.
i.e
Category Accounts:
Cost Element
Material
Material Ohd
Account
01-000-1411-0000-00
01-000-1421-0000-00
Org / Subinvenotry Accounts:

Cost Element
Material
Material Ohd
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Account
01-000-1410-0000-00
01-000-1420-0000-00
Run Create Accounting - Cost Management and transfer journals to GL

Query the transaction and open its SLA accounting
SLA Accounts:
Cost Element
Material
Material Overhead
Account
01-000-1411-0000-00
01-000-1421-0000-00
MTA Accounts:
Cost Element
Material
Material Overhead
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Account
01-000-1410-0000-00
01-000-1420-0000-00
References
Doc ID 788666.1 PLA-SLA A Use Case of Setting Up Product Line Accounting Using The Release
12.1.1 Permanent Inventory Structure (CST-SLA)

Doc ID 234734.1 Setup and Use of Product Line Accounting for WIP Category Default WIP Class
Doc ID 579114.1 How to setup Product Line Accounting (PLA) in R12 when also using Subledger
Accounting (SLA)
Doc ID 1078837.1 R12 SLA : How Can I Set Up to Use 'Item Category' Value to Derive Account
Number
Doc ID 1332897.1 Is There A Client Extension For Wip Transaction Costing Similar To CSTPSCHK ?
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What are the main setup steps to implement product line accounting?

Product Line Accounting

Or Category Accounting overview

Copyright 2014, Oracle and/or its affiliates. All rights reserved.