ORACLE DATA SHEET

PEOPLESOFT COST
MANAGEMENT

PeopleSoft Cost Management provides the control and flexibility you need to
manage costs throughout your supply chain. With powerful features that support
multiple methods of costing, comprehensive analysis, flexible overhead allocation,
and accurate accounting and reporting, our cost management system enables you to

Support multiple model your business exactly as you require it.

costing methods. PeopleSoft Cost Management supports a variety of inventory costing methods that
enable you to effectively track costs in production as well as in your finished goods
Perform accurate supply chain. It also enables you to easily perform revaluations, analyze
manufacturing performance, and perform cost simulations.
accounting and
comprehensive Event-Driven Solutions
analysis. PeopleSoft Workflow messages can communicate changes affecting item or
production costs and potential production variances. Use it to:
Control your • Inform the selected role—using a workflow message—of any bill of material
financial, (BOM) or routing changes.
governmental, and • Advise the appropriate person—such as the cost accountant—when scrap is
management recorded, or of potential production variances.
reporting. Use PeopleSoft Navigator to create maps that show your team the activities and
steps they need to take to perform their jobs. Present a process-oriented view of
PeopleSoft application pages.

Simplified Cost Foundation Setup

With easy cost foundation setup, you can define unlimited cost types including
standard, weighted average, forecasted, current, activity-based and more. You can:

• Select the purchase price option that’s best for you—to facilitate simulations
and what-if analysis.

• Set up cost versions to maintain a history of the different costs calculated for
each cost type.

• Automatically determine labor and machine costs with conversion codes and
conversion overhead codes linked to work centers, jobs, and routings.

• Choose labor or machine costs or rates expressed as a rate “per hour” or “per
unit.”

• Select rate types for conversion costing overhead—percentage of labor, per

labor hour, percentage of machine, and per machine hour. Or select a rate type
of “per unit” to allocate activity-driven overhead.

Item Costing
Cost Management provides full item costing functionality. Use it to:

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• Add costs in addition to material, labor, machine, and conversion.

• Calculate additional costs based on percentage of material costs, percentage of

total costs, or amount per unit.

• Establish transfer prices or mark-up percentages for items transferred at

different costs to other business units.

• Copy basic cost structures across your enterprise.

• Copy costs and rates between business units.

Landed Costs
To track the complete cost of an item, you can include the landed cost charges in the
item’s cost. Landed cost charges can include expenses such as freight, insurance,
duty, and handling. You can:
• Specify the calculation and allocation method for each charge when you define
landed cost charges for items.
• Create cost templates that specify which cost charges to attach to any
combination of item, item category, vendor, vendor location, ship-to ID, and
purchasing business unit.

• Directly associate, in PeopleSoft Purchasing, cost templates and individual

charges with a purchase order header or purchase order schedule.

Based on the charges associated with a purchase order, the system creates estimated
costs for purchase orders and receipts. When you receive and put away a weighted
average or an actual costed item, the system values the transaction based on the total
landed cost. For standard costed items, the system continues to use the item’s
standard cost.

Support of Multiple Costing Methods

To support the need for financial, governmental, and management reporting, you can
maintain multiple cost books within a PeopleSoft Inventory business unit in those
environments where you buy and sell inventory with no manufacturing. For items in
each cost book, you define a profile, consisting of a receipt cost method, a cost flow,
and a deplete cost method, to value inventory transactions involving those items.
The costing approach you choose can be independent of how the inventory is
physically moved. For example, you can use a first in, first out (FIFO) picking
method for inventory shipments but cost the transactions using any costing method.
PeopleSoft Cost Management supports:

• Non-cost.

• Standard.
• FIFO actual.

• LIFO actual.

• By specific lot ID.

• By specific serial ID.

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• Perpetual weighted average.

• Periodic weighted average.

• Retroactive perpetual average.

You might require different cost methods for regulatory or analytical purposes. For
example, you might want to cost in FIFO order for tax reporting purposes, but use
specific serial ID for customer profitability analysis.

Cost Roll-Ups
Within our standard costing environment, the cost of manufactured items,
engineering changes, and configured items are automatically calculated based on an
item’s product structure, routing, and applicable rates for the manufacturing business
unit. You can perform cost roll-ups for a single item, a range of items, a group of
items, or all items within a business unit as well as for any cost type. You can:
• Recalculate costs at lower levels or use existing item costs.

• Compare cost versions to determine impact of changes in cost.

• Roll up costs based on production or engineering bills of materials (BOMs) and

production/master or engineering routings.

• Use the last purchase order price for an item when rolling up standard costs for
purchased items.

• Use a weighted-average cost based on purchase receipts when rolling up the

standard costs for purchased items.

• Track errors encountered in the cost roll-up process by means of an error

message log so you can review the errors, take corrective action, and then roll
up the item costs again.

Production Cost Updates

With the PeopleSoft Cost Management solution, you can update existing standard
costs using the costs associated with the cost type and version you select. Use it to:

• Update all items or a single item.

• Select the cost type and version to use for standard cost updating. Standard
costs are used in inventory costing, transaction processing, and variance
analysis.

• Update inventory values—including stores, finished goods, inspection, and

work-in-process (WIP)—based on new standard costs.

• Create detailed reports that analyze the costing ramifications of production.

• Analyze the impact of updating costs without affecting your current standard
costs.

Dynamic Inquiry and Report Capabilities

PeopleSoft Cost Management accommodates the reporting needs of both financial
and management accounting. Use it to:

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• Display item costs by cost version, including this level and lower level costs
categorized by cost element.

• Create detailed reports that analyze the costing ramifications of production—

including production variances and potential production variances by tolerance.

• Review labor and machine efficiency and use.

• Compare cost versions after rolling up two separate cost type and version
combinations to analyze the impact of BOM, routing, or rate changes on item
costs.

• Display manufacturing and engineering BOM costs including costed BOM

summary, component detail, and main item detail by item.

• Analyze costs due to engineering changes and compare the revised item cost to
its current standard cost.

Inventory Accounting
PeopleSoft Cost Management provides a number of different methods for costing
your inventory. In both PeopleSoft Inventory and Manufacturing—on an item-by-
item basis—you can choose standard, weighted average, or actual cost. You can:
• Define the accounting entries for each transaction. You can choose to define
the accounts by item, item groups, distribution types, and/or individual cost
elements.

• Define accounting entries for transferring material from one location to

another. You can define interunit ownership, interunit inventory transfer
accounts, and interunit shipment accounts.

• Create costed transaction records for all inventory business units or for a
specific business unit only.

• Use intraunit processing to create balancing entries for transfers between

ChartFields (such as Fund) within the same business unit.

• Create accounting entries for posting to PeopleSoft General Ledger or a third-

party general ledger system.

• Easily and selectively view accounting entries, accounting entry detail, and
item cost history.

• Ensure for each inventory putaway, the entries to the accrued liability.
ChartFields from PeopleSoft Cost Management are reconciled with the entries
from accounts payable.
• Analyze financial transactions by easily going back and forth from the account
entry in the general ledger to the actual detail transactions that occurred in
production.

• Define inventory accounts by location to provide financial visibility based on

where the inventory resides.

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Cost Performance Management

PeopleSoft Cost Management enables you to efficiently manage and evaluate cost
performance. You can:

• Close production for accounting with ability to reopen, if desired.

• Provide WIP inventory value information on demand including material, labor,

machine, and overhead components.

• Create detailed reports that analyze the costing ramifications of production.

• Calculate and display variances—configuration, usage, component yield, lot
size, and routing process—on accounting close or while still in process.

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