Select a Cost Category to use as the default for departments that do

not have a cost category defined. Department costs are then posted to
the appropriate cost elements. Values are Maintenance, Operations,
Contract, and any other values that you might have added within the
extensible lookup table. See: Overview of eAM Cost Management.

Material charges are classified as

Material cost elements.
Resource charge of type person is
classified as a Labor cost element.
Resource charge of type machine is
classified as Equipment cost element

The Cost Defaults region represents default cost information for future Work Orders,
without defined cost elements within the work order.
Select an Enterprise Asset Management Cost Element to indicate how to capture cost
overheads and any miscellaneous resource costs. Valid values are Equipment, Labor,
and Material. See: Overview of eAM Cost Management.

Overview of eAM Cost Management

Costs generate as maintenance work is executed and completed. These costs roll up
through the Parent/Child hierarchies, defined within Enterprise Asset Management,
and can roll up to any level within an asset hierarchy. Labor, Material, and Equipment
charges further classify into several maintenance cost categories.
Enterprise Asset Management captures and retains all work. You can reference
completed work to review operations, resources, and costs. This information provides
the scope of work and the process by which it is completed.
eAM Costing Methods and Mappings

eAM supports four perpetual costing methods: standard, average, FIFO, and LIFO.
As a foundation, eAM uses the following five basic cost elements provided by Cost
Management
Material
Material Overhead
Resource
Resource Overhead
Outside Processing
Cost Elements

Product costs are the sum of their elemental costs. Cost elements are defined as follows:

Material - The raw material/component cost at the lowest level of the bill of material
determined from the unit cost of the component item.

Material Overhead - The overhead cost of material, calculated as a percentage of the

total cost, or as a fixed charge per item, lot, or activity. You can use material overhead
for any costs attributed to direct material costs. If you use Work in Process, then you
can also apply material overhead at the assembly level using a variety of allocation
charge methods.

Resource - Direct costs, such as people (labor), machines, space, or miscellaneous

charges, required to manufacture products. Resources can be calculated as the
standard resource rate times the standard units on the routing, per operation, or as a
fixed charge per item or lot passing through an operation.

Overhead - The overhead cost of resource and outside processing, calculated as a

percentage of the resource or outside processing cost, as a fixed amount per resource
unit, or as a fixed charge per item or lot passing through an operation. Overhead is
used as a means to allocate department costs or activities. For example, you can
define multiple overhead subelements to cover both fixed and variable overhead, each
with its own rate. You can assign multiple overhead subelements to a single
department, and vice versa.

Outside Processing - This is the cost of outside processing purchased from a supplier.
Outside processing may be a fixed charge per item or lot processed, a fixed amount
per outside processing resource unit, or the standard resource rate times the standard
units on the routing operation. To implement outside processing costs, you must
define a routing operation, and use an outside processing resourc

Asset management requires different cost classifications. eAM provides these cost
classifications, while maintaining the integrity of the basic costing rules. The five cost
elements above are translated into cost elements that are familiar to maintenance managers.
eAM classifies work done on maintenance Work Orders into cost categories. By default,
eAM has defined three cost categories: Contract, Operations, and Maintenance.
You can define additional cost categories, if needed. Each cost category is further classified
into three cost elements: Equipment, Labor, and Material.

Material - Costs from material transactions.

Labor - Costs from labor resource transactions.

Equipment - Costs from equipment resource transactions

eAM Parameters --> Cost Defaults--> Cost element

Material charges are classified as Material cost elements.
Resource charge of type person is classified as a Labor cost element.
Resource charge of type machine is classified as Equipment cost element. All other
resource types are classified by the default cost element in the eAM Parameters

Setting Up Cost Categories

Cost Category codes are used as the default for departments that do not have a cost category
defined. Department costs are then posted to the appropriate cost elements. Valid values are

Maintenance, Operations, Contract, and any other values that you might have added within
this extensible lookup table. See: Overview of eAM Cost Management.
By default, eAM has defined three cost categories: Contract, Operations, and Maintenance.
However, you can define additional cost categories, if needed. After you have added the cost
categories, they are available in the Cost Category list of values, within the Enterprise Asset
Management Parameters window (See: Defining eAM Parameters).
To define additional cost categories:

1. Navigate to the Oracle Manufacturing Lookups window.

2. Select BOM_EAM_COST_CATEGORY from the Type list of values.
3. Enter a numeric value in the Code field. Oracle recommends that you enter values in
increments of 10, enabling you to easily add codes later.
Warning: Do not use alpha codes. Entering alpha codes causes database errors in the
application.
4. Enter the Meaning of the code, for example, High.
5. Enter a Description for the code.
6. Optionally enter a Tag to categorize lookup values. This field is informational.
7. The Effective From Date defaults as the system date, but you can update this.
Optionally enter a Effective To Date to indicate an expiration of the code.
8. Select the Enabled check box to enable this code for Enterprise Asset Management.
9. Save your work.