Sie sind auf Seite 1von 3

Oracle Apps Tutorial: Understanding Cost Elements, Cost Types, Cost Groups, and Costing Methods in Cost Management

On May 20, 2013, in Oracle Cost Management, Oracle E-Business Suite, Oracle Supply Chain Management, by ssutphin There are four main Cost Management concepts that are important to costing. They are Cost Elements, Cost Types, Cost Groups, and Costing Method. Cost elements divide your items cost into five main elements and into as many sub-elements as you want. The five main cost elements are defined by Oracle and you can not change them. They are material, material overhead, resource, overhead, and outside processing. The material and material overhead are used in purchasing an item. The resource, overhead, and outside processing are used in the manufacturing of an item. Think on the material cost element as the sum of the purchased material and the material overhead element as the sum of the overheads associated with buying and handling that material. The other three elements are manufacturing cost. Resource cost element represents the labor and machinery cost involved in the manufacturing process. The overhead element represents the overheads involved in the manufacturing process. The last cost element is the outside processing element. This cost element represents the cost of having a 3rd party perform a step in the manufacturing process. The step is specifically called out in the routing of the item. To give you a little background on how the Oracle determines the cost of a manufactured item, each manufactured item as a BOM (Bill of Material) and a routing. The BOM tells us what and how much material to use and the routing tells us what resources to use. Cost Elements

Material Material Overhead Resource Overhead Outside Processing

Cost types allow you to maintain different versions of an items cost (by cost element). For transactional processing and accounting, Oracle only uses one cost type. For the standard costing method, this is a cost type called Frozen and for the average costing method, this is a a cost type called Average. You can not directly update the Frozen or Average cost types. The Frozen cost type is updated using the Standard Cost Update program. This program copies cost from another cost type to the Frozen type. The differences between to two costs will create an adjustment to your inventory value. The Average cost is updated when you receive an item on a purchase order. You can maintain other cost types for historical reporting or to simulate an items cost under different cost scenarios. Say you wanted to know what the cost of an item would be if a certain category of raw materials purchase price changed. You could copy the Frozen cost to another cost type and then update the material cost for all items in that raw material category. Then after you run a Supply Chain Rollup with your new cost type, you could compare the impact of the price

change on your finished goods. You could also perform the same analysis if you had a change in your labor rates.

Item Cost by Cost Type and Cost Element Now the next concept gets a lot of people confused. It is the concept of Cost Groups. A Cost Group is a subdivision of costs within a single inventory organization. Normally your item cost would be uniform in each inventory organization. But with Cost Groups, you can maintain different costs for each cost type within a single inventory organization. I have used this feature in an Average costing environment with Project Manufacturing you can only maintain multiple cost groups if Project Manufacturing or Warehouse Management is installed. In this implementation, we defined each project to be in its own cost group and therefore maintain its own Average cost for purchased material. We maintained a cost type to record the actual cost (Average) and a cost type to record the estimated cost. This organization specialized in engineered-to-order products and estimating the correct item cost was critical to pricing.

Item Cost by Inventory Organization, Cost Type, Cost Group, and Cost Elements The final main concept in Cost Management is the costing method. This determines how you are going to populate each of the cost elements. There are two main costing methods with three speciality cost methods. The two main costing methods are standard cost and average cost. The difference in these two methods are how purchased items are costed and how make items (assemblies) costs are calculated. When using the standard costing method, you defined a cost (set a standard) for each cost element: material (purchased items), material overheads, WIP overhead, WIP resources, and outside processing. Using the average costing method, the material cost element and the outside processing element are set by the purchase price. The other cost elements (material overhead, overhead, resource) are set the same way as in the standard costing method.

Lets compare the two different costing methods (standard and average) by cost element and by item type (buy or make). In a buy item, we will only have two cost elements: material and material overhead. Receiving a buy item Cost Element Standard Costing Material @ a user defined cost using the Frozen cost type Material @ a user defined cost using the Overhead Frozen cost type Average Costing @ the PO price using the Average cost type @ a user defined cost using the AvgRates cost type

WIP or miscellaneous Issuing, shipping, or transferring a buy item Cost Element Standard Costing Average Costing Material @ a user defined cost using the @ the weighted average cost (for that cost Frozen cost type group) using the Average cost type Material @ a user defined cost using the @ the weighted average cost using the Overhead Frozen cost type Average cost typ WIP Job Charge Cost Element Resources Overhead Outside Processing Standard Costing @ a user defined cost using the Frozen cost type @ a user defined cost using the Frozen cost type @ a user defined cost using the Frozen cost type Average Costing @ a user defined cost using the AvgRates cost type @ a user defined cost using the AvgRates cost type @ a user defined cost using the AvgRates cost type

For WIP jobs, you can base the items cost on actual units used or on standard units. To use actual material units, you would record the actual material issued to the job. We call this process pushing material to the job. To use standard material units, you would set the material to backflush. We call this process pulling material to the job. The same goes for labor. You can record the actual hours worked at each step in the job or setup the WIP job to record standard hours. The advantage of using actual units is a more accurate item cost especially in a configure-to-order or an engineer-to-order environment. The disadvantage of using actual units is the effort involved in tracking and entering the data.

Das könnte Ihnen auch gefallen