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Cost Accounting As You Want It ─ EBS R12 Cost Accounting with SLA

Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”. Cost Accounting As You Want It ─ EBS R12 Cost Accounting with SLA. Douglas A. Volz Douglas Volz Consulting, Inc. OAUG Discrete MFG Cost Sub-Committee Lead.

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Cost Accounting As You Want It ─ EBS R12 Cost Accounting with SLA

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  1. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Cost Accounting As You Want It ─ EBS R12 Cost Accounting with SLA Douglas A. Volz Douglas Volz Consulting, Inc. OAUG Discrete MFG Cost Sub-Committee Lead

  2. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Agenda • Oracle Discrete Costing SLA enhancements • Case example: Discrete Costing-Product Line Accounting • Oracle Process Costing MAC transitioning to SLA

  3. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Oracle Discrete Costing SLA enhancements: Increased Flexibility Release 11i account recognition “pain points” eliminated by Subledger Accounting (SLA): • SLA removes limitations for recording COGS and Revenue (Cost Account Generator/workflow and A/R AutoAccounting are still in use) • Gives you the ability to record inventory and WIP accounts with more flexibility

  4. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Oracle Discrete Costing SLA enhancements: Increased Flexibility Flexible variance account recognition for: • Invoice price and purchase variances • Average cost adjustment • Standard cost adjustment • Manufacturing variances • Account aliases • Freight charges • Most other inventory, manufacturing and related account entries

  5. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Subledger Accounting Method (SLAM) Setup Steps • Create account derivation rules • Create journal line types • Create a journal lines definition(link the journal line type to the account derivation rule) • Create an application accounting definition(copy an existing definition and modify it) • Create a subledger accounting method(copy “standard accrual” and create a new one) • Assign it to a Ledger

  6. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Key Concepts for SLA Transaction Types Event Model: definition of the subledger transaction types and lifecycle • Entity : Classification of source of transaction • Event Class: Classifies transaction types for accounting rule purposes • Event Type: for each transaction type, defines possible actions with accounting significance ENTITY Material Transaction, Receiving or WIP or Write Off EVENT CLASS Logical grouping of events which have similar kind of accounting The most granular level of business event which has accounting impact EVENT TYPE

  7. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Setup and Process PROCESS JOURNAL ENTRY SETUPS Enter Transaction(s) Define/copy and modify account derivation rules Cost Manager Define/copy and modify journal line types Create Accounting* Transfer Journal Entries to GL Define/copy and modify descriptions *Run ‘Create Accounting – Cost Management’ concurrent request for accounting all transactions from the Cost Management – SLA responsibility. Receiving Accounting can be generated in the Purchasing responsibilities using the ‘Create Accounting – Receiving’ concurrent request. These requests have an option to transfer the entries created to General Ledger. A separate process is also available.

  8. GL Journal Entries and Balances Transactions Accounting Events Accounting Configurations Subledger Journal Entries Journal Entry Setup Subledger Balances SLA Cost Management Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Setup and Process Accounting Program

  9. Case Example: Discrete Costing-Product Line Accounting Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

  10. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Example: Purchase Price Variance product Line Say there are two brands of cell phones, Samsung and Nokia • We want to track variances by cell phone brands • We are going to use 2 different ways to address this same requirement • Cost/SLA mapping set capability(works for Discrete and Process Costing) • Category Accounting – R11i Cost Accounting migrated to SLA in R12.1 (only works with Discrete Costing)

  11. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Cost/SLA Mapping Set Capability

  12. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Cost SLA Mapping Set Capability: PPV by product Line • Product Line Setup Steps Using SLA mapping set • Enter your SLA account derivation rule for Purchase Price Variance accounts • Associate the new account derivation rule to your Journal Line Type • Associate the Application Accounting Definition with Subledger Accounting Method

  13. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Cost/SLA Mapping Set Capability • Product Line Accounting – Descriptive flexfield

  14. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Cost/SLA Mapping Set Capability • Product Line Accounting – Item Descriptive FF

  15. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Cost/SLA Mapping Set Capability • Mapping set – Account Derivation Rule

  16. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Cost/SLA Mapping Set Capability • Mapping set – Account Derivation Rule

  17. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Cost/SLA Mapping Set Capability • SLA Journal Line / Derivation Rule

  18. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Cost/SLA Mapping Set Capability • Associate Journal Lines Definition to the Event Class

  19. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Cost/SLA Mapping Set Capability • Note the same ADR is usable for Standard Cost Update

  20. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Cost/SLA Mapping Set Capability • Note the same ADR is usable for Standard Cost Update

  21. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Cost/SLA Mapping Set Capability • Associate SLA Definition to the SLA Method/Ledger

  22. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Cost/SLA Mapping Set Capability • Assign product line code to the inventory item

  23. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Cost/SLA Mapping Set Capability • The material subledger from 11i still exists Inventory Inventory Receiving PPV Matl Overhead Absorption

  24. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Cost/SLA Mapping Set Capability • SLA Entries That Go to Your G/L

  25. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Cost/SLA Mapping Set Capability • For the Standard Cost Updates That Go to Your G/L

  26. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Category Accounting – Cost Accounting migrated to SLA in R12.1

  27. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Product Line Category Accounting • Create a new structure under the key flexfield “Item Category”

  28. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Product Line Category Accounting • Create a new structure under the key flexfield “Item Category” • Create category codes

  29. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Product Line Category Accounting • Create a new structure under the key flexfield “Item Category” • Create category codes • Create category set

  30. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Product Line Category Accounting • Create a new structure under the key flexfield “Item Category” • Create category codes • Create category set • Assign “Product Line Accounting” functional area category set

  31. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Product Line Category Accounting • Assign product line category accounts

  32. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Product Line Category Accounting • Account Derivation Rule would have used a source directly

  33. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Product Line Category Accounting • Summary Notes • Product line accounting can be achieved in many ways without using the Costing Hook. • In R12 SLA is the Oracle R12 accounting platform and Costing supplies application sources from INV, WIP, RCV… to build the accounting journals. • One caveat: Pre-Release 12 subledger accounting reports are reading data from Costing distribution layer (such as the Material Account Distribution Summary or Detail Reports). Those reports will not show SLA journals. SLA provides a set of new accounting reports (such as Journal Entries Report, Accounting Analysis Report…) which can be modified as desired using BI Publisher.

  34. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Discrete Inventory Period Close and Upgrade • Inventory Period Close Process • Inventory interim G/L transfer has been replaced by SLA • The Inventory Accounting Period close works just like it did before, however, SLA now sends accounting information to the general ledger • Upgrade Process • Customers have option of migrating the whole historical data to SLA or choose which periods data to be migrated. • Customers get option to either upgrade in downtime when upgrading or anytime after the upgrade process. • Default for Cost management is to migrate the present calendar year data to SLA.

  35. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” Oracle Process Costing: MAC transitioning to SLA

  36. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” OPM MAC transitioning to SLA • Converged inventory model • Inventory Organizations that are Process will use Process Costing • Process users are denied access to Discrete Costing forms • Process Enabled organizations can not setup costs in the Discrete Costing application • Sub Ledger Architecture (SLA) replaces MAC

  37. Cost Setup Calculate Cost Store Costs Oracle GL Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” OPM MAC transitioning to SLA 11i OPM Order Management GMI (OPM Inventory) Purchasing GMD, GME MAC

  38. Cost Setup Calculate Cost Store Costs Oracle GL Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” OPM MAC transitioning to SLA R12 OPM Order Management Oracle Inventory Purchasing GMD, GME SLA

  39. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” OPM MAC transitioning to SLA • Subledger accounting is an intermediate step between subledger products and the Oracle General Ledger • Each transaction that requires accounting is represented by a complete and balanced subledger journal entry, stored in a common data model.

  40. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” OPM MAC transitioning to SLA 11i OPM General Ledger Interface Subledger GL Export Journal Import Journal Posting For G/L integration, discrete costing works the same as OPM costing

  41. OPM Receivables Payables Projects Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” OPM MAC transitioning to SLA R12 OPM Oracle SubledgerAccounting Oracle General Ledger For G/L integration, discrete costing works the same as OPM costing

  42. OPM Costing Engine generates costs. OPM Costing Engine generates costs. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” OPM MAC transitioning to SLA SLA OPM MAC Completed material and/or resource transactions. Completed material and/or resource transactions. Cost Pre-processor will create accounting Events OPM Subledger process processes these transactions to create Journal entries SLA accounting program processes the events to create the journal entries

  43. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” OPM MAC transitioning to SLA

  44. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” OPM MAC transitioning to SLA

  45. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” OPM MAC transitioning to SLA • Most of the steps are automated using migration scripts • All the Account Definitions would be migrated as ADRs • Manual Steps to be completed are: • Assign Account Derivation Rules to Journal Line Definitions • Validate Application Accounting Definition • Assign User Subledger Accounting Method to Ledger

  46. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” OPM MAC transitioning to SLA

  47. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” OPM MAC transitioning to SLA • NO LOSS of functionality by moving to SLA model • A new sub-menu created under Cost Management for SLA forms. • Fiscal Policy and Event Fiscal Policy screens retained with minor modifications. Most of the fields will be read-only. • OPM Event model mapped to SLA event model.

  48. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” • Acknowledgements of assistance: • Herve Yu – Oracle Cost Management Development Manager • Diane Struebel – Schreiber Foods Cost Manager – OAUG Process MFG Cost Sub-Committee Lead

  49. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” • Additional information available from: • R12 Oracle Subledger Accounting – Implementation Guide • R12 Oracle Cost Management – User Guide • R12 Oracle Process Manufacturing Cost Management - User Guide

  50. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990” THANK YOU

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