Standard Cost Update

Laura Miller Oracle August 2001

The update performs the following tasks: . and then the cost update is used to transfer the pending cost to the standard cost.Creates accounting transactions . . then it is not necessary to create the frozen cost for the purchased item. The standard cost is determined by a company to reflect all the costs of an item for a time period. The item must have a pending cost defined. the cost update program automatically revalues on-hand balances in the organizations that share costs. depending on the business rules of the company. Actual costs of production are measured against those standards. but can be set for a short time period as well. but it is not used for inventory purposes. If sharing costs across organizations. The actual cost of items is known. the cost update re-values discrete job balances. Note: The Use Default Cost/Controls on the item cost screen must be set to NO when trying to create a pending cost if transactions already exist. These variances are then reported to the General Ledger. the frozen cost cannot be entered and saved. The costs can only be updated from the master costing organization. if the item is already on a bill of material that will be rolled up at a later time.Submits adjustment reports .Standard costs for items are usually set once a year.Creates item cost history . The Cost Update process requires that there is an open accounting period. and variances are recorded by the system. Also.Moves the cost type to the frozen cost type . For these items. resource costs are not used because these items generally do not consume resources.Can save update details for rerunning the adjustment reports The variance amount that is created during the standard cost update is the new standard cost minus the old standard cost. and creates accounting adjustments. which must be using standard costs. Standard Cost update prints three reports: Inventory Standard Cost Adjustment Report (CSTRUSIA) Intransit Standard Cost Adjustment Report (CSTRUSTA) WIP Standard Cost Adjustment Report (CSTRUSJA) Purchased items use material and material overhead cost elements. If using Work in Process. For items that have existing transactions. This is the agreed on price that will be used for all reports and uses until the standard cost is updated.

utilities Outside Processing . Frozen ..e. In addition to material and material overhead cost elements.People or machines used in manufacturing i.. These rolled up costs are then updated to standard costs.. This will set the desired standard to be used for the specified time period. and the second is for the difference between the actual cost and the standard cost. This report can be used prior to closing jobs . Users can add as many cost types as required. There are two seeded cost types in the system. overhead and outside processing are added to the manufactured item. These costs can be broken into cost sub-elements for more detail: Material .e.e.Extra costs associated with purchased items i.These are the standard costs of items. the costs of resources. The item costs are broken down by these elements in subinventories and in Work in Process. painting To divide costs across a business. Rollup pending costs (or any other cost type). but these two type are seeded and cannot be deleted. depreciation. These are included in the overall cost of the item.General costs of doing business i. WIP classes have two accounts: one for costs and one for variances. These costs cannot be rolled up because these are the end cost. subinventories and WIP classes are used.These costs are created when there are new parts or when the user wants to add new costs ahead of the regular year end cost update. Pending .Manufactured items use the Bill of Material and routings to gather costs. the destination of rollups..e. then perform the standard cost update from pending to frozen. freight costs Resources . Each have their own set of accounts to hold costs. These accounts are setup in the organization parameters. A cost rollup will compile all the cost of an assembly. the costs relieved. The first is the standard cost. These costs are separate from frozen costs and can be transferred to frozen at any time by using the cost update process.Raw material costs Material Overhead . The Discrete Job Value report shows the costs incurred. and the resulting variances.Costs of subcontractor services i. labor costs Overhead .

This would be used if an actual rate was being entered against a job. The standard rate is used and recorded against the WIP class. asset non-standard. It is debited from other systems outside manufacturing. If the data is not okay. Two accounts are used: Variance account .Used by Inventory items Resource Cost Transactions processor .. expense non-standard.e. . Absorption account . It is credited by any resource usage.Used by WIP transactions These can be activated in the Request Interface Managers form: Inv > Setup > Transactions > Interface Managers Special > Launch The Cost Manager is a concurrent process that spawns workers that process the transactions. These can then be transferred to the general ledger. the costed_flag is set to NULL and the rows are inserted into the MTL_TRANSACTIONS_ACCOUNTS table. review variances that may occur for job closes and make the appropriate adjustments prior to the job close. then transactions will not be processed properly and will need to be resubmitted. If the data is okay. the Cost Manager spawns the appropriate worker: The Material Cost Worker validates costing data. All accounting processing uses the following processors: Material Cost Transaction processor . The Cost Manager runs in the background at a set interval. then the costed_flag is set = N or E and must be fixed and resubmitted for processing. but a WIP class is mandatory.standard. ** It is best to run the cost update at the beginning of an inventory accounting period before new transactions start for the period. Resources also use accounts to track the costs. A WIP class is required for each type of workorder -. labor. The Resource Cost Worker validates data and moves it to WIP_TRANSACTION_ACCOUNTS for transfer.e. If these are not started. i. The cost transaction processors must be started before entering transactions. When transactions are available for processing. This is generally not done.This is used the most. i. If the data cannot be validated. A default class can be set in the parameters.

The Cost Type Comparison Report displays differences in item costs for any two cost types. print and review reports: The Standard Cost Adjustment Report shows the valuation changes for inventory. Update to frozen costs. as well as this level/previous level costs. It is recommended that this responsibility be assigned a high level of security.then the transactions will remain in the WIP_COST_TXN_INTERFACE table and will need to be resubmitted. Before running cost update. and work in process.for specific item .all costs to include a combination of overhead resource activity and item costs .range of items . absolute amounts. Standard Cost update can be submitted even when running transactions. This report can be run for specific item. The Maintain Cost History Privilege must be included in the user’s responsibility to perform this process. Job Close and GL transfer processes.items whose costs are NOT based on rollup **Note: The update process commits to the database and changes the value of inventory. . or minimum unit costs. range of items or categories. Steps to perform Standard Cost Update: 1. Standard Cost Update is incompatible with Period Close. operations. Comparisons can be performed on cost elements and subelements. This process copies the pending cost to frozen costs and prints the cost update reports. Rollup costs cost items . This report can sort by item.items whose costs are based on rollup . Options to update: . perform the revaluation and after completing the revaluation. The report can also include percentage cost differences.specific category . category or subinventory. it resubmits the accounting processors. since accounting transactions occur in a batch process. When submitting the cost update it: will turn off the accounting. intransit. activities. 3.

WIP accounting class defines the adjustment account used for discrete jobs.4.Update the new cost type 3 . The history is held for each cost update. Cost Adjustment Reports If the save option is chosen when running cost update. WIP is adjusted by job and cost element accounts. Note: The Privilege to View Cost security function must be included in the user’s responsibility to view the cost history. This history can be purged when it is no longer needed. Inventory is adjusted by subinventory and elemental cost accounts. Specify the general ledger account. This can be viewed using the View Standard Cost Update form.Copy frozen costs to a new cost type 2 .Update standard costs from new cost type • Using the Discrete Job Value report and the detail and summary amounts. These reports can be purged when no longer needed Note: The Privilege to Maintain Cost security function must be included as part of the user’s responsibility Common Problems after running the Cost Update: • The user has run cost update but not all costs have changed.When happy compare with frozen costs 4 . This history can be viewed for each item in total and by cost element. . This can then be reprinted. Explanation: Solution: Have not carried out the full procedure 1 . This is used by cost management to collect the changes in values and generate transactions that adjust the inventory accounts. then the inventory and WIP on-hand quantities are saved. they do not agree after a cost update although the total variance does. Cost History This is a history of each item that is in inventory. The Privilege to Maintain Cost security function must be included as part of the user’s responsibility 6. 5.

if you then print Discrete Job Value report for 'closed' jobs. then the summary and details differ. then the cost_type_ids will stay in the system. when a discrete job is closed. . • If the standard cost update program is aborted then performance issues can occur. • Updating Standard costs and getting error APP-20501 CMCICU: error processing in main The logfile reveals: APP-20502 cmlogi has detected an internal data error Check to see if one of the Inventory organizations has been disabled. This is because Oracle WIP produces the Discrete Job Value report. Since costs are inserted with a cost_type_id = negative update_id and then the changes occur. All child organizations must have the current Inventory Accounting period open when running a cost update for a master costing organization. Since Cost updates do not update closed jobs. The summary information is based on the WIP_PERIOD_BALANCES table. and delete from CST_ITEM_COST_DETAILS where cost_type_id <0.The detail information (material & resources) is based on the CST_ITEM_COSTS table. the system updates the CST_ITEM_COSTS table to get the new values. • Updating Standard costs and getting error APP-20501 CMCICU :error processing in main() The current Inventory accounting period must be open in all child organizations that correspond to the master when updating costs for the master organization. Running the following scripts can help keep the tables clean and increase performance: delete from CST_ITEM_COSTS where cost_type_id <0. When you perform a cost update.

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