Product Line Accounting

Or Category Accounting overview

Rajkumar Chockalingam

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 Product Line Accounting Or Category Accounting

- Product line accounting (PLA) or category accounting is widely used in

manufacturing industries in order to account valuations based on product
/material categorizations.

- For example an organization may handle materials of type Steel, Rubber,

Plastic, etc. and it is possible to report the inventory / WIP valuations based
on the above categorization with the help of PLA.

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 PLA in E-business Suite:
 Default WIP accounting classes based on PLA categories when converting
planned orders

 Default WIP accounting classes based on PLA categories

– when defining discrete jobs,
– associating repetitive assemblies and lines
– and when performing work order-less completions

 Perform distributions using these default WIP classes accounts

 Track WIP and inventory transaction valuations by PLA categorizations

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 Setups involved to implement PLA:

1) Define Item Category Structure

2) Define a Category Set
3) Define Categories
4) Associate default category set for ‘Product line accounting’ functional
Area
5) Set up Default WIP Accounting Class for categories
6) Set Up Category Accounts

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 1) Define Item Category Structure
System Administrator -> Application -> Flexfield -> Key -> Segments -> Query title Item Categories

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 2) Define Category Set
3) Define Category Codes
Inventory -> Setup -> Items -> Categories -> Category Sets , Category Codes

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 4) Associate default category set for product line accounting functional Area
Inventory -> Setup -> Items -> Categories -> Default Category sets

To use category accounts

item needs to be
assigned with a category
of category set
associated with PLA
functional Area.

In this case Category set:

Accounting- DSS
Category Accounting

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 5) Set up Default WIP Accounting Class for categories
Cost Management -> Setup -> Account Assignments-> Category Default WIP Classes

- In Std Costing org WAC can

be assigned only to category

- In Avg Costing org WAC can

be assigned to Cost group /
Category combination.

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 6) Set Up Category Accounts

Cost Management -> Setup -> Categories -> Category Accounts

- In Std Costing org category accounts can be assigned for a sub-inventory and category combination

- In Avg Costing Org category accounts can be assigned for cost group and category combination.

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 completing set ups discussed above

 It is possible to only default WIP accounting class in WIP docs

 Category accounts defined for categories still can not be used.

PLA implementation is still “Incomplete”

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 to use Category Accounts

 define and implement the Account Generation client extension

(Or)
 In R12 use Sub-ledger Accounting (SLA)

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 Example : 1

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 Default WIP Acctg Classes in WIPDJMDF based on WAC category
defaults

Steps:
 Create an Assembly (item-a) and associate PLA Category (DSS_Category1)
 Create BOM & Routing
 Create a WIP Accounting class
 Associate WAC with PLA Category of assembly item
 Create a Discrete job
 Confirm WAC gets defaulted from category defaults and not from WIP parameter

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  Create an Assembly (item-a)
 Associate PLA Category to assembly item (DSS_Category1)

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  BOM and Routing for assembly test-a

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  Create a WIP Accounting class
 Associate WAC with PLA Category

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  Create a discrete Job
 Confirm WAC defaults from category defaults.

The WAC for discrete job gets defaulted

from category defaults and not from WIP
Parameter.

WIP Accounting Class

WIP Parameter SFM
Category Defaults TEST_PLA

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 Example : 2

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 Derive PLA category accounts using client extension (Costing hook).

The solution is designed using costing hook

client extension CSTPSCHK .std_get_account_id

Organization: Standard costing org with no projects and no WMS enabled (Org
code:M5 & Org id :1642)

Logic: When the Accounting line type is 1 (inventory valuation line) fetch accounts
from category account assignment (MTL_CATEGORY_ACCOUNTS) else fetch
default accounts.

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  Create a Test Item and associate PLA Category

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  Assign Category Accounts to PLA Category

Category : DSS_Category1 Material Account: 01-000-1411-0000-000

Sub-Inventory : Stores Material overhead Account: 01-000-1421-0000-000

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  Note Accounts defined in Organization parameters and sub-inventory
Material Account 01-000-1410-0000-000
Material overhead Account 01-000-1420-0000-000

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  Setup costing hook

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 contd.

- The extension is written on the costing hook

CSTPSCHK .std_get_account_id

This routine is used to determine the accounts

which are needed for posting inventory
transactions.

- Condition will fetch category accounts for

accounting line type 1 and sub-inventory code
‘Stores’ in Org M5.

- The category accounts will be used for all

items which has PLA category assigned and for
other items it will use default account.

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  Create a Miscellaneous receipt txn and get it costed
Inventory Valuation Material A/c (01-000-1411-0000-000) is derived from Category accounts and
organization / Sub inventory material account (01-000-1411-0000-000) not used.

Inventory Valuation Material

Inventory Valuation Material ovhd

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  Confirm results from back end
MTL_MATERIAL_TRANSACTIONS

MTL_TRANSACTION_ACCOUNTS

GL_CODE_COMBINATIONS_KFV

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 Example : 3

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 Derive PLA Category accounts using SLA without client extensions

The solution is designed using a custom AAD with seeded sources

Organization: Standard costing org with no projects and no WMS enabled (Org
code:M5 Org id :1642)

Product Line Accounting Category Material Account

Product Line Accounting Category Material Overhead Account

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  Create custom account derivation rules (ADR) using seeded PLA sources
Cost Management SLA -> SLA-> Accounting Setup-> Accounting methods Builder -> Journal entry
setups -> Account Derivation rules.

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  PLA Seeded sources

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  Create Journal Line Definitions (JLD) and associate user defined ADR
Cost Management SLA -> SLA-> Methods and definitions ->Journal line definitions

- User defined ADR for JLT

‘Inventory Valuation’ alone
and rest all are seeded.

- The ADR will derive

Inventory Valuation Accounts
from PLA category
Accounting setups

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  Create Application Accounting Definitions (AAD)
 Associate User Define Journal Line definitions (JLD)
Cost Management SLA -> SLA-> Methods and definitions ->Application Accounting Definitions

- Assign custom JLD to miscellaneous event

class.

- To use PLA category accounts for other

Event Classes - respective JLD must need to
be modified.

- After creating custom AAD, validate AAD and

confirm validation status is Valid for all event
classes.

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  Create Sub - ledger Accounting Methods (SLAM)
 Associate AAD defined to application Cost Management
Cost Management SLA -> SLA-> Methods and definitions ->Subledger Accounting methods

SLAM: RC_STD_ACCRUAL

AAD: RC_PLA

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  Assign SLAM to Ledger
Cost Management SLA -> SLA-> Methods and definitions ->Subledger Accounting methods -> Click on
Accounting set ups -> query and Update Ledger

Ledger: Vision Operations

SLAM : RC Standard Accrual

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  Create a miscellaneous transaction and allow it to cost.

Valuation accounts derived as per

subinventory / org set up and not from
category accounts since costing hook
(client extension) is disabled.

i.e

Category Accounts:
Cost Element Account
Material 01-000-1411-0000-00
Material Ohd 01-000-1421-0000-00

Org / Subinvenotry Accounts:

Cost Element Account
Material 01-000-1410-0000-00
Material Ohd 01-000-1420-0000-00

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  Run Create Accounting - Cost Management and transfer journals to GL
 Query the transaction and open its SLA accounting

SLA Accounts:
Cost Element Account
Material 01-000-1411-0000-00
Material Overhead 01-000-1421-0000-00

MTA Accounts:
Cost Element Account
Material 01-000-1410-0000-00
Material Overhead 01-000-1420-0000-00

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 References

 Doc ID 788666.1 PLA-SLA A Use Case of Setting Up Product Line Accounting Using The Release
12.1.1 Permanent Inventory Structure (CST-SLA)
 Doc ID 234734.1 Setup and Use of Product Line Accounting for WIP Category Default WIP Class
 Doc ID 579114.1 How to setup Product Line Accounting (PLA) in R12 when also using Subledger
Accounting (SLA)
 Doc ID 1078837.1 R12 SLA : How Can I Set Up to Use 'Item Category' Value to Derive Account
Number
 Doc ID 1332897.1 Is There A Client Extension For Wip Transaction Costing Similar To CSTPSCHK ?

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