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Deep Dive into Cost Planning

Sritama Sarkar
Principal Product Manager
Oracle Cost Management Cloud
October 18, 2018

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Safe Harbor Statement
The following is intended to outline our general product direction. It is intended for
information purposes only, and may not be incorporated into any contract. It is not a
commitment to deliver any material, code, or functionality, and should not be relied upon
in making purchasing decisions. The development, release, and timing of any features or
functionality described for Oracle’s products remains at the sole discretion of Oracle.

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Agenda
v Cost Planning Overview
v Cost Planning Setups
v Reporting
v Demonstration
v Q&A

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Cost Planning: Overview
Manufacturing Work Definitions
• Operations • Output Item
• Input Items • Costing Batch Output Size
• Resource Usage • Fixed vs. variable

Choose one WD per output item by using:

• Production priority
• Costing priority
• Name Update
Standard
Cost Scenario (Effective date) Costs Cost Accounting
Review
Standard Costs for Cost Accounting
Purchased Item Cost Results
Estimates per Unit • Standard cost adjustments as of effective date

Resource Costs per Hour

Rollup Costs

Material and Workcenter Revise

Overhead Rates Parameters

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Cost Planning: Overview
• Cost planning focuses on core business activities to set standard costs for:
– Purchased inventory items
– Manufactured items
• By rolling up costs to include material, resource, and overhead costs
– Configured items
– Contract manufacturing items
• Standards costs can be defined for all items irrespective of their cost
accounting method (actual or perpetual)

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Cost Planning: Overview
Input Process Output

Typical Manufacturing Process

• Purchased • Resource • Finished
Components Consumption Product
(Sub- • Overhead
assemblies) Absorption

Estimate standard Estimate rates for Calculate rolled-up

cost for purchased resource usages and cost of finished
items. overhead absorptions. product.

Cost Planning features

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Cost Planning for Manufacturing: Implementation Decision
Points
Feature Name
Estimate standard cost for items
Estimate standard cost for
assemblies
Estimate indirect costs
Valuation Structures for costing
Decisions Impact
Are you using standard costing as If no, standard costs cannot
your inventory valuation method? be used for cost update.
Are you using standard costing as If no, rolled-up costs cannot
your inventory valuation method? be used in accounting.
If no, use Manage Accounting
Are you using standard costing as
Overhead Rules UI to set up
your inventory valuation method?
transactional overhead rules.
Standard cost planning
mandates that all costs are
What is the level at which costs
defined either at the cost org
will be defined?
level or at cost org – plant
combination level
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Scenario-driven Cost Planning

vDefines the overall

scope of cost planning
for upcoming period
vSupports In-house
Manufacturing and
Contract
Manufacturing
vSupports Phantom
Items and Configured
Items
vSupports retroactive
costing

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Setting up a Cost Scenario: Manage Standard Costs
Enter Standard Costs
vEstimate standard cost for through
purchased items Spreadsheets

vDefine estimates for different

accounting or management
reporting purposes
vProvide Mass Edit capability to
update costs for several items
vStandard costs can be entered
directly in the UI or imported via
spreadsheet or via the Interface
Standard Costs ESS process
vStandard costs can be defined
retroactive or to be effective in
future

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Setting up a Cost Scenario: Manage Resource Rates

vDefine hourly rates for

labor and equipment
resources
vDefine resource rates as
resources are added or
define resource rates as it's
own task
vResources rates can be
defined to be effective for a
past or future date

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Setting up a Cost Scenario: Manage Overhead Rates

v Define rates for absorbing work center or

plant overheads into estimated item cost
v Use plant overhead rates to absorb factory
expenses as a percentage of material costs
v Use workcenter overheads to absorb factory
expenses using an hourly rate for the time
spent in a work center
v Absorption type allows users to absorb the
cost based on different options
– (Percent) Material costs at first level only,
– (Percent) Material costs at all levels, and
– (Percent) Material and resource costs at
all levels
– Fixed

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Setting up a Cost Scenario: View Rolled-up Costs

vProvides detailed
analysis of rolled-up costs
with work definition and
operation information in
tree view and hierarchical
view
vExport to excel feature
allows you to download
in spreadsheet for further
processing

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Setting up a Cost Scenario: Update Standard Costs

v Update standard costs to cost

accounting on demand
v Perform standard cost updates
retroactively or for a future date
v Cost accounting can
automatically implement the new
standards when the effective
date arrives
v Review warnings and errors in
publishing
v Use Undo Cost Update process to
rollback unintended cost updates

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Setting up a Cost Scenario: Compare Standard Costs

vCompare rolled-up costs

across the scenarios or
with the current Compare cost &
published cost value differences
between scenarios or
last published cost
vReview cost and
inventory value
differences

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Reporting
• Seeded OTBI Reports
vCosted BOM Report
vCosted BOM (Cost Element) Report
vWhere Used Report
vScenario Exceptions Report
vCost Comparison Report
• OTBI Subject Areas
vCost Rollup Details Real Time
vOverhead Rates Real Time
vResource Rates Real Time
vWhere Used Details Real Time

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Cost Management Cloud Team at Open World 2018

Manufacturing and Cost Management Demo Pod

Key contacts:
Kaushik Sivakumar (Costing Product Strategy)
Gerald Goodbody (Costing Product Management)
Sritama Sarkar (Costing Product Management)

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