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Oracle Process ManufacturingOPM Financials
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Agenda
New on R12
Item Cost
Resource Cost Overhead Cost
Cost Process
Cost Types
Calendar
Cost Component Classes & Group
Cost Analysis Code General Ledger Fiscal Policy
Actual Cost Set Up / Process
Few PointsActual Costing
Exercise
http://localhost/var/www/apps/conversion/tmp/scratch_2/OPM_Costing/005_OPM_Costing_SLA_R12_v1_IN.ppthttp://localhost/var/www/apps/conversion/tmp/scratch_2/OPM_Costing/005_OPM_Costing_SLA_R12_v1_IN.ppt5/21/2018 OPM Financials R12
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Cost Setup Calculate Cost Store Costs SLA Oracle GL
Oracle
InventoryPurchasing GMD, GME
Order
Management
OPM Costing in R12
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OPM Costing Process
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Items Costing Attribute
Ensure for Asset Items,
Inventory Asset Value
(in Costing Tab) &Process Costing Enabled
Flags are set.
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Cost Type
(N) Setup / Cost Type
Select Raw material & Product calculation method
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OPM Cost Calendar
(N) Setup / Cost Calendar
Define CostingCalendar for eachFiscal Year
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OPM Cost Calendar
(N) Setup / Cost Calendar
Assign Legal Entiry andCost Type to eachCalendar
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OPM Cost Calendar
(N) Setup / Cost Calendar
Open Cost Period
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Cost Component Class
(N) Setup / Cost Component Class
Cost component classes are buckets used to define the elements of
cost detail you want to view. Costs from several ingredients, routings,
or burdens can be summarized into component classes.
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Cost Component Class
(N) Setup / Cost Component Class
The cost component classes are classified into 5 different elements or
usages: Material, Resource, Overhead, Expense Allocation and
Standard Cost Adjustment types
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Understand about Item Cost
This level cost
Lower level cost if existsintermediate ingredientsused
(N) OPM Financials > Items Cost
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Understand about Resource Cost
Enter the Nominal Costfor this resource for using it for one unitof measure. For example, if you are defining the resource costfor a mixing machine, and its usage is measured in hours, thenenter the cost of using the resource in per unit.
Select Cost Method &
Enter cost Per Unit
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Understand about Overhead Cost
. A overhead is a cost associated with a resource other than the
resource usage assigned in the routing.
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Actual Costing Setups & Processes
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Actual Cost Setup
Defining Adjustment Reason Codes
Defining Allocation Codes
Defining Allocation Definitions
Defining Expense Allocation Accounts
Actual Cost Calculation
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Actual Cost Adjustment Reason
If a situation arises in which
you have to make
adjustments to the actual
costs calculated by OPM,
you can use the Actual
Costs Adjustments window
to enter the necessarycomponent cost changes for
new cost calculations.
However, you will have to
specify a valid reason code
that justifies the reason for
that cost change. You define
those reasons on the ActualCosts Adjustment Codes
window.
(N) Setup > Actual Cost > Adjustment Reason
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Defining Allocation Codes
On this window you create the allocation codes that are used to define the
indirect expenses from the general ledger accrued expense accounts. Later,
you will define the parameters to allocate those expenses to the appropriatecost component classes. Since allocations can be processed in multiple steps,
we recommend that you adopt a naming convention to simplify processing of
ranges of allocation codes.
(N)OPM Financials > Setup > Actual Cost > Expense Allocations >
Codes
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Defining Allocation Definitions
On this window you specify two sets of information:
The item, component class, and related information required identifying
where the allocation results will be placed.
The account keys that maintain the basis information (for example, the
quantity of production and machine usage) associated with each item.
The Allocation Results section at the bottom of the window is linked to a
specific item line, and indicates where the resulting allocated expenses are
placed.
This functionality requires Oracle General Ledger to be fully installed. If you
are using OPM not integrated with Oracle Financials, and GL is not fully
installed, then a warning message displays and the data you enter may not
be used.
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Defining Allocation Definitions
(N) OPM Financials > Setup > Actual Costs > Expense
Allocations > Basis
Select Allocation Code
Select Allocation Method I.e Fixed % or
Amount basis
Enter Items for Allocation &
their % Allocation
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Defining Expense Allocation Accounts
Assign Cost Component Class and Analysis Code to Allocation Code
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Define Expense Allocation Accounts
(N) OPM > Setup > Actual Cost > Expense
Allocations > Expense
On this window you specify the general ledger account
, which capture the overhead expenses to be allocated.Here you are defining the expense pool to be allocated;
on the Allocation Definitions window, you will specify the products
to which these expenses are allocated.
Select Period to date or Year to date
as per requirement
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Actual Cost Calculation
The following topics are covered:
Processing Expense Allocations
Calculate Actual Costs
Viewing Actual Cost Processing Status
Using Actual Cost Adjustments Viewing Actual Costs
Displaying Item Cost List
Important Points
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Running Expense Allocations
(N) OPM Financials > View > Request > Submit a new Request
From parameter of OPM Cost Allocation Process entering Allocation code,
Cost Calendar and period
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OPM Cost Allocations
The GL Expense allocations are averaged out using Prior Period Inventory Balance for items that have no
current period transactions, such as receipts or production. Whenever there is a non-zero GL expense
amount that could not be allocated because the total quantity is zero, a warning is displayed.
For Raw Materials:
The GL Expense amount is calculated as the sum of GL expenses to be allocated and the product of prior
period inventory balance and prior period cost. This is represented as:
GL Expense component cost = [(Previous Period Inventory Balance * Previous Period GL Expense
Component Cost) + GL Expense Amount for Current Period] / [Previous Period Inventory Balance +
Received Quantity]
For Products
The Quantity is determined as sum of the previous period balance, the total quantity produced and the
total quantity received, if any. The GL Expense amount is the sum of GL expenses to be allocated in the
current period and the product of prior period inventory balance and prior period cost.
GL Expense component cost = [(Previous Period Inventory Balance * Previous Period Component Cost) +
GL Expense Amount for Current Period] / [Previous Period Inventory Balance + Produced Quantity +Received Quantity (if any)]
The GL Expense allocations are averaged out using Prior Period Inventory Balance for items that have no
current period transactions, such as receipts or production. Whenever there is a non-zero GL expense
amount that could not be allocated because the total quantity is zero, a warning is displayed.
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Calculate Actual Cost
Enter Calendar, Period, Cost Method in above window and then Press
Accept to run Actual Cost Process. System will fire request to run.
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Calculate Actual Cost
System displays the number of errors while running Actual cost process. You
can view the errors from the Action menu.
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Calculate Actual Cost
(M) Action > View Error Message
Before viewing the actual cost, first correct errors and then again run
the Actual cost process.
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View Actual Cost
(N) OPM Financials > Item Cost
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View Actual Cost Transactions
Click on Action menu from Items Cost form, you can view actual transactions.
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Actual Cost Adjustment
This option allows you to adjust the final calculated actual cost
of a raw material or product based on quantity and unit cost.Actual costs are recalculated based on the adjustments that
you enter for the specified item, warehouse, cost calendar, and
cost period.
Note that these adjustments do not directly alter the cost of an
item. Rather, they influence cost calculations by adding
quantity and cost adjustments to the existing costs after other
cost calculations have been completed. This approach
produces a complete adjustment audit trail.
Avoid Cost AdjustmentsIf unavoidable, this would require manual journals
in General Ledger to be passed for reconciliation between OPM and GL.
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Actual Cost Adjustment
(N) OPM Financials > Actual Costs > Adjustments
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Important Points-Actual Costing
Entirely driven by Actual Production Batch details. I.e. Quantity of actual
Ingredients consumed, Finished Goods Yielded, Resource Usage. Only batches which are Closedin a specific period are considered for Costing.
No need to establish Sourceand TargetWarehouse relationships.
Cost Warehouse (Optional) as in Standard Cost.
Instead of CostRollup Process- ActualCost Processneeds to be run.
While submitting this process, the previous Inventory Period should have been
at least PreliminaryClosed.
For each of the cost components calculation would be governed by the Raw
Material / Finished Goods calculation methods set in Cost Methods I.e.
PWAC, PMAC, PPAC, LSTT, LSTI.
Widely used computation methods are PWACand PMAC.
Resource / Burden costs (if required) need to be established for Actual
Costingmethod separately for each of the cost period.
All the other setups like Calendar (specific for Actual Cost Method), Component
classes, Groups, Material cost components - same as in Standard Costing.
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OPM Financials Accounting - SLA
Cost Update
Event Models
COGS Recognition
OPM Pre-Processor Create Accounting
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Cost Update
(N) OPM Financials > Cost Update
Select calendar and period to
Update ost
Selet Final Update for Closing Period
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COGS Recognition
Running in sequency three Program:
Record Order Management Transaction
Collect Revenue Recognition Information
Generate COGS Recognition Events
(N) OPM Finacials > COGS Recogition
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Record Order Management
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Collect Revenue Recognition Information
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Generate COGS Recognition Events
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OPM Pre-processor Accounting
(N) OPM Financials > OPM Accounting Pre-processor
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OPM Pre-processor Accounting
(M) Actions > Submit Process
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OPM Pre-processor Accounting
Select Period and Source Transactions to Accounting
You can run Pre-Processor for each
Source in separate running.
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Event Model - Example
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Run Create Accounting
(M) View > Request > Sumit a new Request
Choose Draft Mode first for
Review Journal Entry
You can run Create accounting for each
Process Category Transaction or All
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Run Create Accounting
View Output to review
Create Accounting program result
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Review the accounting entries
Subledger Journal Entry
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Subledger Journal Entry
Description
Line Type
Account Derivation Rule
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Period End Closing with SLA
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Period End Closing Progress
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Run the preliminary inventory close
Final Close = No is temporary closing ;
Final Close = Y is permanent
Close inventory Period
R P li i d
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Run Preliminary cost update process
Run OPM Accounting Pre processor
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Run OPM Accounting Pre-processor
R D t il d S bl d R t
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Run Detailed Subledger Report
R i th ti t i
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Review the accounting entries
I t Cl Fi l
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Inventory Close- Final
Fi l C t U d t
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Final Cost Update
C t ti fi l d
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Create accountingfinal mode
On Submitting program,
the following requestswill be invoked:
Create Accounting
Accounting Program
Journal Import and
Subledger Accounting
Balances Update
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