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    Oracle Apps Cost Management

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    Ramesh Garikapati
    The document summarizes the key changes to Oracle's Cost Management module in R12. Major changes include: 1. Linking revenue recognition to COGS recognition, requiring COGS to be deferred until revenue is recognized. 2. Integrating with new modules like Subledger Accounting, Process Manufacturing, and Landed Cost Management. 3. Enhancing costing processes like cost rollups, periodic costing, and accrual calculations. 4. Improving reporting with new inventory value reports and the ability to run reports as of a given date.

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    Oracle Apps Cost Management

    Uploaded by

    Ramesh Garikapati
    234 views6 pages
    The document summarizes the key changes to Oracle's Cost Management module in R12. Major changes include: 1. Linking revenue recognition to COGS recognition, requiring COGS to be deferred until revenue is recognized. 2. Integrating with new modules like Subledger Accounting, Process Manufacturing, and Landed Cost Management. 3. Enhancing costing processes like cost rollups, periodic costing, and accrual calculations. 4. Improving reporting with new inventory value reports and the ability to run reports as of a given date.

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    The document summarizes the key changes to Oracle's Cost Management module in R12. Major changes include: 1. Linking revenue recognition to COGS recognition, requiring COGS to be deferred until revenue is recognized. 2. Integrating with new modules like Subledger Accounting, Process Manufacturing, and Landed Cost Management. 3. Enhancing costing processes like cost rollups, periodic costing, and accrual calculations. 4. Improving reporting with new inventory value reports and the ability to run reports as of a given date.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    234 views6 pages

    Oracle Apps Cost Management

    Uploaded by

    Ramesh Garikapati
    The document summarizes the key changes to Oracle's Cost Management module in R12. Major changes include: 1. Linking revenue recognition to COGS recognition, requiring COGS to be deferred until revenue is recognized. 2. Integrating with new modules like Subledger Accounting, Process Manufacturing, and Landed Cost Management. 3. Enhancing costing processes like cost rollups, periodic costing, and accrual calculations. 4. Improving reporting with new inventory value reports and the ability to run reports as of a given date.

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    © All Rights Reserved
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    of 6

    Oracle Apps Tutorial: R12 Changes to

    the Cost Management Module (up to


    R12.2)
    On March 31, 2012, in New Oracle R12 Features, Oracle Cost Management, Oracle E-Business Suite, Oracle
    R12, by ssutphin

    Looking at the R12 changes to Cost Management, I found that they fall into the following
    categories: accounting, integration with other modules, costing, reporting, accruals, periodend, and data architectural changes. Lets start off with one of the biggest changes, the
    accounting for cost of goods sold (COGS).

    Accounting
    Cost of Goods Sold Recognition
    In R12, Oracle linked the revenue cognition with the COGS Recognition. If you do not recognize
    revenue when you ship an item then you should not recognize the cost of goods. This requires
    the Cost Management module to first book COGS to a deferred account when an item is
    shipped and then reverse the deferral when the revenue is recognized. When the revenue is
    recognized is based on revenue contingency rules that can either be entered into OM or can be
    apply when they are imported into AR.
    For example, if your customer takes title of the item when they receive the item, rather than
    when you ship the item, then you will need to incorporate the delivery time into your revenue
    recognition rule. Oracle Revenue Management allows you to create rules to defer for a set
    number of days. This rule can be associated with an OM line or a customer ship-to site. When
    the set number of days have elapsed, then Oracle Receivables when book the revenue. Cost
    Management gathers this information and will book the cost of goods entry.
    Now there are now two flows in the COGS recognition. The first flow, the shipping and invoice
    flow, starts with the shipment of the item and books the deferred revenue and COGS. The
    second flow, the revenue and COGS recognition flow, starts with the release of the revenue
    contingency and books the revenue and COGS. In R12, all shipments will go through these two
    steps even if there isnt a revenue rule.

    Shipping and Invoice Flow

    Shipping and Invoice Accounting Flow

    Shipment Flow Steps


    1.
    2.

    Shipping sends a Sales Order Issue transaction to Inventory


    Cost Manager generates the material distribution
    Dr Deferred COGS $XX.XX
    Cr Inventory $XX.XX
    3. Create Accounting used the material distribution to create a journal entry
    4. OM sends an invoice line to AR
    5. AR applies a revenue contingency rule to the invoice when the invoice is imported. If there is
    a revenue contingency, revenue will be deferred.
    Dr AR Trade $XX.XX
    Cr Deferred Revenue $XX.XX
    6. Create Accounting uses the invoice distribution to create a journal entry
    7. Subledger journal entries are interfaced to GL

    Revenue and COGS Recognition Flow

    Revenue and COGS Recognition Flow

    1.

    Revenue contingency expires or is removed and the Revenue Recognition program has
    run
    Dr Deferred Revenue $XX.XX
    Cr Revenue $XX.XX

    2.
    3.
    4.
    5.
    6.

    Create Accounting uses the invoice distribution to create a journal entry


    Cost Management runs the programs to gather revenue information
    Cost Management runs the COGS recognition program to create the COGS recognition
    logical material transaction
    Create Accounting used the material distribution to create a journal entry
    Subledger journal entries are interfaced to GL

    Integration with other Modules


    New Integrations

    In R12, there are three new modules that integrate with Cost Management Subledger
    Accounting, Oracle Process Manufacturing, and Landed Cost Management.
    The integration with Subledger Accounting changes the flow of the journal entries from
    Inventory, Receiving, and WIP. The Create Accounting program will use the material and
    receiving transactions and WIP distributions to create journal entries. When you look in the
    General Leger, you will see that journal entry source also change to Cost Management. There
    have been two changes since the initial release of R12. In R12.1.1, Oracle moved the
    accounting rules for the Global Accounting Engine to Subledger Accounting and in R12.1.2,
    Oracle created a new program to allow you to upgrade historic transactions and generate
    journal entries in Subledger Accounting. These upgraded journal entries will not be sent to the
    General Ledger.
    When Oracle moved the Process Manufacturing module functionality into the standard discrete
    manufacturing inventory module, the Cost Management need to extend its functionality to
    handle the new transactions.

    In R12.1.1, Oracle introduced the Landed Cost Management Module to allow you to incorporate
    other types of costs into your item cost. To handle the new transactions, Cost Management
    need to extended

    Enhanced Integrations
    With new R12 enhancements to Work in Process (WIP); Enterprise Asset Management (EAM);
    Inventory; and Shop Floor, Cost Management need to be enhanced to handle these new
    transactions.
    Module

    Enhancement

    WIP

    Component yield and fixed component usage


    on WIP job

    EAM

    Direct delivery on PO service lines, Install base


    convergence, budgeting and forecast support

    Inventory

    Costing for Chargeable Subcontracting


    inventory orgs

    Shop Floor (12.1.3)

    Encumbrance accounting support for PO with


    shop floor destination

    Costing

    Cost Rollup
    If you use the Bill of Materials module, R12 has changed the program used to perform a cost
    roll-up. The new program is called Supply Chain Cost Rollup. In additional to this new program,
    R12 also changed the Cost Rollup reports
    Old Program/Report

    New Program/Report in R12

    Assembly Cost Rollup

    Supply Chain Cost Rollup

    Consolidated Bill of Material

    Supply Chain Consolidated Bill of Material

    Indented Bill of Material

    Supply Chain Consolidated Indented Bill of Material

    Periodic Costing
    R12 introduced several enhancements to periodic costing. These enhancements include:

    Support for inter-org transfer accounting


    Improved costing algorithm
    Support for material overhead rules
    Support for EAM
    Support for WIP job final completion costs
    Support for completion costs based on required quantity
    Support for scrap absorption
    Support for iterative periodic costing for Brazil 12.0.4
    Introduction of an iterative periodic costing manager 12.1.1

    Reporting
    In R12, Oracle created new inventory value reports. These reports now can be run using an
    as-of date. If you enter an as-of date, the inventory value will display the inventory value
    up to that date. These new reports are:
    Old Report

    New Report

    Inventory Value Report

    Inventory Value Report by Subinventory

    Inventory Value Report Warehouse


    Management

    Inventory Value Report by Cost Group

    All Inventories Value Report

    All Inventories Value Report by Subinventory

    All Inventories Value Report Average


    CostingAll Inventories Value Report
    Warehouse Management

    All Inventories Value Report by Cost Group

    Elemental Inventory Value Report

    Elemental Inventory Value Report by


    Subinventory

    Elemental Inventory Value Report Average


    CostingElemental Inventory Value Report
    Warehouse Management

    Elemental Inventory Value Report by Cost


    Group
    Inventory Master Book Report (R12.1.2) *

    * The Inventory Master Book Report was created to meet the Italian and Chinese legal
    reporting requirements.

    Accruals

    Accrual Reconciliation and Write-Off


    In R12, there are three changes to the accrual reconciliation and write-off process. The first is a
    new load program that will allow you to run it independently from the accrual reconciliation
    report. The load program can also be run in refresh mode, rather than reloading all the data.
    The second change is the new reconciliation reports. There are three reconciliation reports
    Accrual Reconciliation Summary, Payables and Purchase Order Accrual Reconciliation Report,
    and the Miscellaneous Accrual Reconciliation report. These reports use the Oracle XML
    publisher and can be exported to Excel for further analysis. The third change is the new
    accrual write-off forms.

    Period End Accruals


    Oracle changed the period-end accruals to calculate the accrual at the PO distribution line level
    instead of the PO shipment line level. This will create a more accurate accrual entry because it
    will use the accounting at the distribution level instead of allocating the shipment level accrual
    to the distribution lines.

    Period End Processing


    In R12, Oracle introduced three changes to help with identifying transactions that would
    prevent you from closing the period. The first is the ability to drilldown to transactions from the
    Accounting Periods form. The second is a Period Close Pending Transaction report and the last
    a more pro-active tool. It is a new workflow that can notify users if a transaction fails the
    costing process.

    Architecture Changes
    Architectural changes in the Financial suite have been incorporated into Cost Management.
    These changes include a change to operating unit to legal entity relationships, the introduction
    of Multiple Organization Access Control, and the introduction of invoice lines in Accounts
    Payable.

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