Overview of Oracle Discrete Costing For MFG v2
Overview of Oracle Discrete Costing For MFG v2
Overview of Oracle Discrete Costing For MFG v2
Manufacturing
Douglas Volz
Douglas Volz Consulting
doug@volzconsulting.com
Agenda
Inventory Structure
Inventory Organization
Inventory HDQTRS
Subinventory Organization Location
Locators
FG STORES MRB WIP
Subinventory Subinventory Subinventory Subinventory
Locators Locators
Inventory
Orgs Asia-Pac Swiss Dist. Europe US LSP
ORG Dist. Centers Center LSP Orgs Orgs
Korea
Item
Switzerland Europe Dist. US Dist.
Master
Org Centers Centers
(ZZZ)
Costing Methods
Average Costing
Standard Costing
Periodic Costing
FIFO Costing
LIFO Costing
Assembly costs come from the cost of your assemblies built in WIP
FIFO Costing
FIFO costing values inventory by assuming that the oldest inventory (first in)
is the first to be used or sold (first out), but there is no necessary relationship
to the physical movement of specific items
FIFO supports WIP costing
LIFO Costing
LIFO costing values inventory by assuming that the most recently received
item (last in) is the first to be used or sold (first out), but there is no
necessary relationship to the physical movement of specific items
LIFO supports WIP costing
Periodic Costing
Periodic has dual costing capabilities, using Periodic Costing at month-end
and using transaction-based “real-time” costing prior to month-end
Periodic supports WIP costing
Helping people using Oracle Applications since 1990 Slide 9
Cost Structure
Global
Organization
(Item Master)
Inventory Cost
Organization
Outside
Matl Matl O/H Resource Overhead
Processing Cost
Cost Element Cost Element Cost Element Cost Element
Element
Sub-elements
Matl Matl Matl O/H Matl O/H Res Res O/H O/H OSP OSP
1 2 1 2 1 2 1 2 1 2
Each inventory organization has its own item material, labor, outside
processing, and overhead costs
• Each inventory organization may have multiple cost versions, called Cost Types
• You can have any number of cost types that are not active (unimplemented costs)
There is only one “Active” cost type that is used to record your Subledger
Transactions
• Standard costing uses the Frozen cost type, and average costing uses the Average
cost type …
Within an inventory organization, all items have the same costing method,
Average, or Standard or FIFO or LIFO or Periodic
You have five available cost elements for each cost type
• Material (supplier purchase costs)
• Material Overhead (freight in, material handling, etc.)
• Resource (labor, machines, other factors of production)
• Outside Processing (subcontracting or outsourcing)
• Overhead (Resource and Outside Processing Overhead)
ACCOUNTS PURCHASING
PAYABLE Invoices/ INV Receipt
COST
Payments Trans & Costs
Exp Accr MANAGEMENT
Values Trans
Asset
Values INV
Additions
Stds Adj ENGINEERING
Delivery
Items
Trans
Values
Trans
Asset Cost BOM's
FIXED GENERAL Inventory/
Accum Depr INVENTORY
ASSETS LEDGER WIP Trans
Depr Exp
ACCOUNTS
CASH RECEIVABLE
MANAGEMENT WIP Supply
(Bank Recon) to MRP
MRP Release
Items from BOM's
Misc Trans to WIP
for Warranty MRP
Repair Parts
Invoice
Info ORDER
S/O Requirements
ENTRY
Repair
RMA's
SERVICE
Outside processing
Outside processing - Outside processing = efficiency
Sources of:
• Components issued • WIP completions
• Resources earned @ standard rolled
• OSP earned up costs
• Overheads earned
Helping people using Oracle Applications since 1990 Slide 16
Cost Reports and Inquiries
Purchasing has its own close (and also closes off Receiving)
Forms Drilldown
• Using the same Inventory Accounting Periods form you can drilldown to
associated forms to view the problem transactions
Accounting
Configurations
Subledger
Transactions Journal Entries
GL
Accounting Journal Entries
Program and Balances
Module
Enter Transaction(s) Specific One Common
Transaction Accounting
Accounting Subledger
Tables Table
Accounting
Processor
Receiving GL_JE_BATCHES
Material Create XLA_AE_HEADERS GL_
WIP Accounting INTERFACE
GL_JE_HEADERS
XLA_AE_LINES
XLA_DISTRIBUTION GL_JE_LINES
_LINKS
Automates the matching of Cost of Goods Sold (COGS) for a sales order
line to the revenue that is billed for that sales order line.
Deferred “True”
Inventory COGS COGS
1. Customer Shipment 10 10
2. COGS Recognition 10 10
Two reports:
Transaction Value Historical Summary (for Standard Costing)
Transaction Value Historical Summary – Average Costing
Multi-Org Reporting
Multi-Org Material Account Summary Report
Multi-Org Receiving Account Summary Report
Multi-Org WIP Account Summary Report
Multi-Org All Inventories Value Report (with account numbers)
Multi-Org Inventory Value Report (with account numbers)
Multi-Org Receiving Value Report (with account numbers)
Multi-Org Expense Value Report (with account numbers)
Multi-Org WIP Value Report (R12 still has account numbers!)
Douglas A. Volz
Slide 41
Douglas Volz (doug@volzconsulting.com)
Professional Background
Doug Volz is a Senior Architect and Advisor for Oracle Application projects, with a particular interest in
Cost and Project Management. He has 30 years accumulated experience, including 5 years in Oracle
Development (co-designing Oracle Cost Management) and 12 years in industry in Cost and
Accounting Management positions. His Manufacturing and Cost systems experience covers project
management, software design/development, delivery and consulting services, for both Oracle
Corporation, and multiple international consulting firms. Prior to his systems career, Mr. Volz also held
numerous management accounting positions for telecommunications, defense, and electronics
companies.
In his consulting roles, Doug has served over 100 clients. Many of these were multi-org, multi-currency
with global footprints. Countries include US, Mexico, UK, Netherlands, Belgium, Taiwan, P.R.O.C.,
Norway, Japan, Italy and Germany.
Doug leads the OAUG Cost Special Interest Group. He also advises and participates on the Oracle
Customer Advisory Board for Fusion Costing.