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Copyright © 2007, Oracle. All rights reserved

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Oracle Costing
Redwood Shores, CA April 22 2008

Discrete Manufacturing SIG Cost Sub-Committee

R12 Costing Product Line Accounting Demo

Herve Yu - Oracle Cost Management Development Doug Volz ± OAUG Discrete MFG Cost Sub-SIG Rixin Zhu ± Oracle Cost Management Development

Copyright © 2007, Oracle. All rights reserved

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.Discrete Cost Sub-Committee Housekeeping ‡ Welcome to Our Session! ‡ Membership ± tell your work associates about the SIG (be a member of OAUG or other Oracle User Group) ‡ Next Session Dates May 20th . All rights reserved 3 . . Copyright © 2007. Oracle. June 17th 9:00 AM Pacific Time / Noon Eastern Time / 17:00 GMT) ‡ Looking for Speakers for the next two sessions  Do you have a unique way of using Costing that was helpful?  Do you have a good method for solving a common problem that you would like to share? Now on to Subledger Accounting .

All rights reserved 4 .R12 Product Line Accounting Agenda ‡ Business Requirement ± Objective ‡ Use Case ‡ Q and A Copyright © 2007. Oracle.

Oracle. All rights reserved 5 .R12 Product Line Accounting Business Requirement Business Requirements ‡ Better management visibility over profits and inventory levels ‡ Improve your ability to manage your bottom line ‡ Find out which products are winners and losers ‡ Legal requirement in some countries: report your profit and loss based on product lines Objective of this presentation ‡ Demonstrate example to satisfy product line accounting requirements using Costing integrated with SLA Copyright © 2007.

All rights reserved 6 . Oracle.Subledger Accounting (SLA) installed along with Oracle Costing ‡ Example: Purchase Price Variance (PPV) ‡ Purchase Price Variance Definition ‡ Difference between the purchase order price and the standard unit cost. multiplied by the quantity received into inventory ‡ Presentation concepts can be used for any costing method and associated variances Copyright © 2007.R12 Product Line Accounting Assumptions Assumptions and Definitions ‡ R12 .

WIP variances and so forth ‡ To change the default accounting entries you need to set up each SLA rule by Accounting Ledger Copyright © 2007. by directing specified accounting events to specific account numbers or segments. transaction types) such as standard cost updates.R12 Product Line Accounting ‡ General SLA and Cost Processing Notes ‡ You still use the Inventory Cost Processor and WIP Resource Cost Processor that you know and love from Release 11i ‡ The underlying subledger tables are still used by these Cost Processors (MTL_TRANSACTION_ ACCOUNTS and WIP_TRANSACTION_ACCOUNTS) ‡ SLA will pick up these entries and modified them per your SLA setups. Oracle. and put into new SLA tables (XLA_ACCOUNTING_EVENTS.e. XLA_AE_LINES) ‡ This works for ALL accounting event classes (i. purchase price variances. XLA_AE_HEADERS. All rights reserved 7 .

R12 Product Line Accounting ‡ Transaction Processing Overview Copyright © 2007. All rights reserved 8 . Oracle.

the other variance account setup would be similar Copyright © 2007. Oracle. with the goal of determining which product group is providing a higher margin. All rights reserved 9 . They are considering to launch a marketing campaign on a combined service and phone jointly with AT&T. ‡ In order to select the best product on which they will be able to make the maximum of profit. ³ACME´ needs to track profit margin per brand.R12 Product Line Accounting Use Case ± Purchase Price Variance by product Line ‡ The company ³ACME´ is a cell phone retailer ‡ Among the brands of cell phones best seller for ³ACME´. They want to evaluate Oracle Product Line accounting to help them in this exercise. ‡ For this example we are detailing the setup for purchase price variance. they want to track variances and income for Samsung and Nokia products.

Oracle. Set up your product line using SLA mapping set 2.R12 Product Line Accounting Setup Steps ‡ Product Line Setup Steps Assumption: using the SLA mapping set for your Inventory Product Line Accounting 1. Associate the new SLA account derivation rules to your Journal lines within an application accounting definition (Accounting Event) 4. Enter your SLA account derivation rules for Purchase Price Variance and Standard Cost update adjustment accounts 3. Associate the Application Accounting Definition with Subledger Accounting Method Copyright © 2007. All rights reserved 10 .

Oracle.R12 Product Line Accounting Use Case ‡ Product Line Accounting ± Descriptive flexfield Copyright © 2007. All rights reserved 11 .

R12 R12 Product Line Accounting Use Case ‡ Product Line Accounting Setup ± SLA Account Derivation Rule Copyright © 2007. Oracle. All rights reserved 12 .

Oracle. All rights reserved 13 .R12 Product Line Accounting Use Case ‡ Product Line Accounting Setup ± SLA Journal Line / Derivation Rule Copyright © 2007.

Oracle.R12 R12 Product Line Accounting Use Case ‡ Product Line Accounting Setup ± Associate with Events With Journal Lines Copyright © 2007. All rights reserved 14 .

R12 Product Line Accounting Use Case ‡ Product Line Accounting Setup ± Similar setup for Standard Cost Update Copyright © 2007. Oracle. All rights reserved 15 .

All rights reserved 16 . Oracle.R12 Product Line Accounting Use Case ‡ Product Line Accounting Setup ± Associate with SLA Method Copyright © 2007.

Oracle.R12 Product Line Accounting Use Case ± Purchase Price Variance Accounting Line reclassification Create 2 items: Nokia N78 Classify the Nokia N78 as a Nokia product line item Setup a standard material cost for Nokia N78 at 98 USD Create a PO#5859 for 100 N78@ 100 USD Create accounting for this PO delivery Standard Cost Update the item N78 Copyright © 2007. All rights reserved 17 .

All rights reserved 18 . Oracle.R12 Product Line Accounting Use Case ‡ Product Line Accounting Setup ± Items Copyright © 2007.

Oracle. All rights reserved 19 .R12 Product Line Accounting Accounting generated by Cost Management ‡ The material subledger from 11i still exists Inventory Inventory Receiving Matl Overhead Absorption PPV Copyright © 2007.

Oracle. All rights reserved 20 .R12 Product Line Accounting Accounting generated by Sub ledger Accounting ‡ But Now You have SLA Entries That Go to Your G/L Copyright © 2007.

R12 Product Line Accounting Accounting generated by Sub ledger Accounting ‡ For the Standard Cost Update That Go to Your G/L Copyright © 2007. Oracle. All rights reserved 21 .

All rights reserved 22 .R12 Product Line Accounting Using Product Line Accounting Functionality ‡ Brief on Product Line Accounting Functional Area Copyright © 2007. Oracle.

All rights reserved 23 .R12 R12 Product Line Accounting Use Case ‡ Product Line category account Copyright © 2007. Oracle.

Oracle.R12 Product Line Accounting ‡ Account Derivation Rule would have used a source directly Copyright © 2007. All rights reserved 24 .

Oracle. All rights reserved 25 . even for the Standard Cost Update ‡ Note that most of time SLA rules are Ledger specific Copyright © 2007.R12 Product Line Accounting SLA Summary ‡ SLA Summary Notes ‡ Unlike Release 11i you can do this without using Cost Extensions or AX Global Accounting Engine (no programming code) ‡ It works for all underlying material and WIP transactions (Event Classes).

R12 Product Line Accounting SLA Summary ‡ Questions? Copyright © 2007. All rights reserved 26 . Oracle.

All rights reserved 27 .Thank You Copyright © 2007. Oracle.