opm financials r12

5/21/2018 OPM Financials R12

1/59

Oracle Process ManufacturingOPM Financials


2/59

2006 Oracle Corporation Proprietary and Confidential

2

Agenda

New on R12

Item Cost

Resource Cost Overhead Cost

Cost Process

Cost Types

Calendar

Cost Component Classes & Group

Cost Analysis Code General Ledger Fiscal Policy

Actual Cost Set Up / Process

Few PointsActual Costing

Exercise
http://localhost/var/www/apps/conversion/tmp/scratch_2/OPM_Costing/005_OPM_Costing_SLA_R12_v1_IN.ppthttp://localhost/var/www/apps/conversion/tmp/scratch_2/OPM_Costing/005_OPM_Costing_SLA_R12_v1_IN.ppt


3/59


Cost Setup Calculate Cost Store Costs SLA Oracle GL

Oracle

InventoryPurchasing GMD, GME

Order

Management

OPM Costing in R12


4/59


OPM Costing Process


5/59


Items Costing Attribute

Ensure for Asset Items,

Inventory Asset Value

(in Costing Tab) &Process Costing Enabled

Flags are set.


6/59


Cost Type

(N) Setup / Cost Type

Select Raw material & Product calculation method


7/59 2006 Oracle Corporation Proprietary and Confidential

OPM Cost Calendar

(N) Setup / Cost Calendar

Define CostingCalendar for eachFiscal Year



OPM Cost Calendar


Assign Legal Entiry andCost Type to eachCalendar



OPM Cost Calendar


Open Cost Period



Cost Component Class

(N) Setup / Cost Component Class

Cost component classes are buckets used to define the elements of

cost detail you want to view. Costs from several ingredients, routings,

or burdens can be summarized into component classes.



Cost Component Class

(N) Setup / Cost Component Class

The cost component classes are classified into 5 different elements or

usages: Material, Resource, Overhead, Expense Allocation and

Standard Cost Adjustment types



Understand about Item Cost

This level cost

Lower level cost if existsintermediate ingredientsused

(N) OPM Financials > Items Cost



Understand about Resource Cost

Enter the Nominal Costfor this resource for using it for one unitof measure. For example, if you are defining the resource costfor a mixing machine, and its usage is measured in hours, thenenter the cost of using the resource in per unit.

Select Cost Method &

Enter cost Per Unit



Understand about Overhead Cost

. A overhead is a cost associated with a resource other than the

resource usage assigned in the routing.



Actual Costing Setups & Processes


16/59


Actual Cost Setup

Defining Adjustment Reason Codes

Defining Allocation Codes

Defining Allocation Definitions

Defining Expense Allocation Accounts

Actual Cost Calculation


17/59


Actual Cost Adjustment Reason

If a situation arises in which

you have to make

adjustments to the actual

costs calculated by OPM,

you can use the Actual

Costs Adjustments window

to enter the necessarycomponent cost changes for

new cost calculations.

However, you will have to

specify a valid reason code

that justifies the reason for

that cost change. You define

those reasons on the ActualCosts Adjustment Codes

window.

(N) Setup > Actual Cost > Adjustment Reason


18/59


Defining Allocation Codes

On this window you create the allocation codes that are used to define the

indirect expenses from the general ledger accrued expense accounts. Later,

you will define the parameters to allocate those expenses to the appropriatecost component classes. Since allocations can be processed in multiple steps,

we recommend that you adopt a naming convention to simplify processing of

ranges of allocation codes.

(N)OPM Financials > Setup > Actual Cost > Expense Allocations >

Codes


19/59



On this window you specify two sets of information:

The item, component class, and related information required identifying

where the allocation results will be placed.

The account keys that maintain the basis information (for example, the

quantity of production and machine usage) associated with each item.

The Allocation Results section at the bottom of the window is linked to a

specific item line, and indicates where the resulting allocated expenses are

placed.

This functionality requires Oracle General Ledger to be fully installed. If you

are using OPM not integrated with Oracle Financials, and GL is not fully

installed, then a warning message displays and the data you enter may not

be used.


20/59



(N) OPM Financials > Setup > Actual Costs > Expense

Allocations > Basis

Select Allocation Code

Select Allocation Method I.e Fixed % or

Amount basis

Enter Items for Allocation &

their % Allocation


21/59


Defining Expense Allocation Accounts

Assign Cost Component Class and Analysis Code to Allocation Code


22/59


Define Expense Allocation Accounts

(N) OPM > Setup > Actual Cost > Expense

Allocations > Expense

On this window you specify the general ledger account

, which capture the overhead expenses to be allocated.Here you are defining the expense pool to be allocated;

on the Allocation Definitions window, you will specify the products

to which these expenses are allocated.

Select Period to date or Year to date

as per requirement


23/59


Actual Cost Calculation

The following topics are covered:

Processing Expense Allocations

Calculate Actual Costs

Viewing Actual Cost Processing Status

Using Actual Cost Adjustments Viewing Actual Costs

Displaying Item Cost List

Important Points


24/59


Running Expense Allocations

(N) OPM Financials > View > Request > Submit a new Request

From parameter of OPM Cost Allocation Process entering Allocation code,

Cost Calendar and period


25/59


OPM Cost Allocations

The GL Expense allocations are averaged out using Prior Period Inventory Balance for items that have no

current period transactions, such as receipts or production. Whenever there is a non-zero GL expense

amount that could not be allocated because the total quantity is zero, a warning is displayed.

For Raw Materials:

The GL Expense amount is calculated as the sum of GL expenses to be allocated and the product of prior

period inventory balance and prior period cost. This is represented as:

GL Expense component cost = [(Previous Period Inventory Balance * Previous Period GL Expense

Component Cost) + GL Expense Amount for Current Period] / [Previous Period Inventory Balance +

Received Quantity]

For Products

The Quantity is determined as sum of the previous period balance, the total quantity produced and the

total quantity received, if any. The GL Expense amount is the sum of GL expenses to be allocated in the

current period and the product of prior period inventory balance and prior period cost.

GL Expense component cost = [(Previous Period Inventory Balance * Previous Period Component Cost) +

GL Expense Amount for Current Period] / [Previous Period Inventory Balance + Produced Quantity +Received Quantity (if any)]

The GL Expense allocations are averaged out using Prior Period Inventory Balance for items that have no

current period transactions, such as receipts or production. Whenever there is a non-zero GL expense

amount that could not be allocated because the total quantity is zero, a warning is displayed.


26/59


Calculate Actual Cost

Enter Calendar, Period, Cost Method in above window and then Press

Accept to run Actual Cost Process. System will fire request to run.


27/59



System displays the number of errors while running Actual cost process. You

can view the errors from the Action menu.


28/59



(M) Action > View Error Message

Before viewing the actual cost, first correct errors and then again run

the Actual cost process.


29/59


View Actual Cost

(N) OPM Financials > Item Cost


30/59


View Actual Cost Transactions

Click on Action menu from Items Cost form, you can view actual transactions.


31/59


Actual Cost Adjustment

This option allows you to adjust the final calculated actual cost

of a raw material or product based on quantity and unit cost.Actual costs are recalculated based on the adjustments that

you enter for the specified item, warehouse, cost calendar, and

cost period.

Note that these adjustments do not directly alter the cost of an

item. Rather, they influence cost calculations by adding

quantity and cost adjustments to the existing costs after other

cost calculations have been completed. This approach

produces a complete adjustment audit trail.

Avoid Cost AdjustmentsIf unavoidable, this would require manual journals

in General Ledger to be passed for reconciliation between OPM and GL.


32/59


Actual Cost Adjustment

(N) OPM Financials > Actual Costs > Adjustments


33/59


Important Points-Actual Costing

Entirely driven by Actual Production Batch details. I.e. Quantity of actual

Ingredients consumed, Finished Goods Yielded, Resource Usage. Only batches which are Closedin a specific period are considered for Costing.

No need to establish Sourceand TargetWarehouse relationships.

Cost Warehouse (Optional) as in Standard Cost.

Instead of CostRollup Process- ActualCost Processneeds to be run.

While submitting this process, the previous Inventory Period should have been

at least PreliminaryClosed.

For each of the cost components calculation would be governed by the Raw

Material / Finished Goods calculation methods set in Cost Methods I.e.

PWAC, PMAC, PPAC, LSTT, LSTI.

Widely used computation methods are PWACand PMAC.

Resource / Burden costs (if required) need to be established for Actual

Costingmethod separately for each of the cost period.

All the other setups like Calendar (specific for Actual Cost Method), Component

classes, Groups, Material cost components - same as in Standard Costing.


34/59


OPM Financials Accounting - SLA

Cost Update

Event Models

COGS Recognition

OPM Pre-Processor Create Accounting


35/59


Cost Update

(N) OPM Financials > Cost Update

Select calendar and period to

Update ost

Selet Final Update for Closing Period


36/59


COGS Recognition

Running in sequency three Program:

Record Order Management Transaction

Collect Revenue Recognition Information

Generate COGS Recognition Events

(N) OPM Finacials > COGS Recogition


37/59


Record Order Management


38/59


Collect Revenue Recognition Information


39/59


Generate COGS Recognition Events


40/59


OPM Pre-processor Accounting

(N) OPM Financials > OPM Accounting Pre-processor


41/59



(M) Actions > Submit Process


42/59



Select Period and Source Transactions to Accounting

You can run Pre-Processor for each

Source in separate running.


43/59


Event Model - Example


44/59


Run Create Accounting

(M) View > Request > Sumit a new Request

Choose Draft Mode first for

Review Journal Entry

You can run Create accounting for each

Process Category Transaction or All


45/59


Run Create Accounting

View Output to review

Create Accounting program result


46/59

46

Review the accounting entries

Subledger Journal Entry


47/59

47

Subledger Journal Entry

Description

Line Type

Account Derivation Rule


48/59

48

Period End Closing with SLA


49/59

49

Period End Closing Progress


50/59

50

Run the preliminary inventory close

Final Close = No is temporary closing ;

Final Close = Y is permanent

Close inventory Period

R P li i d


51/59

51

Run Preliminary cost update process

Run OPM Accounting Pre processor


52/59

52

Run OPM Accounting Pre-processor

R D t il d S bl d R t


53/59

53

Run Detailed Subledger Report

R i th ti t i


54/59

54

Review the accounting entries

I t Cl Fi l


55/59

55

Inventory Close- Final

Fi l C t U d t


56/59

56

Final Cost Update

C t ti fi l d


57/59

57

Create accountingfinal mode

On Submitting program,

the following requestswill be invoked:

Create Accounting

Accounting Program

Journal Import and

Subledger Accounting

Balances Update


58/59

58

[email protected]

[email protected]
mailto:[email protected]:[email protected]


59/59

59

opm financials r12

Documents