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 decision. The development, release, and timing
of any features or functionality described for Oracle’s products
remains at the sole discretion of Oracle.

Copyright © 2007, Oracle. All rights reserved 1

 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

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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 , 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 . . .

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R12 Product Line Accounting
Agenda

• Business Requirement – Objective

• Use Case

• Q and A

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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

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R12 Product Line Accounting
Assumptions

Assumptions and Definitions

• R12 - 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, Oracle. All rights reserved 6

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, by directing specified accounting events to specific
account numbers or segments, and put into new SLA tables
(XLA_ACCOUNTING_EVENTS, XLA_AE_HEADERS, XLA_AE_LINES)

• This works for ALL accounting event classes (i.e. transaction

types) such as standard cost updates, purchase price variances,
WIP variances and so forth
• To change the default accounting entries you need to set up each
SLA rule by Accounting Ledger

Copyright © 2007, Oracle. All rights reserved 7

R12 Product Line Accounting

• Transaction Processing Overview

Start Process PO Receipt into Stock – Delivery into Inventory

Supply is relieved since the

Enter RCV_SHIPMENT_
MTL_SUPPLY goods as going into stock Debit Inventory
PO Delivery LINES
Transaction Credit Receiving
Credit MOH Absorption
Debit/Credit PPV

Receiving Mat’l Cost

RCV_SHIPMENT MTL_TRANSACTI
Transaction HEADERS Transaction ON_ACCOUNTS
Processor Processor

RCV MTL_MATERIAL_ Inventory SLA XLA_AE_HEADE

RCV_ MTL_MATERIAL_
Transactions TRANSACTIONS
TRANSACTIONS_ Transaction TRANSACTIONS
Accounting RS,
Interface TEMP Processor Engine XLA_AE_LINES

You can transfer to

the G/L at the same
This diagram lists out the PO Delivery MTL_ONHAND_QUANTITIES_ time if desired Accounting
transaction flow from start to finish DETAIL Entries
Created

Copyright © 2007, Oracle. All rights reserved 8

R12 Product Line Accounting
Use Case – Purchase Price Variance by product Line
• The company “ACME” is a cell phone retailer

• Among the brands of cell phones best seller for “ACME”, they want to
track variances and income for Samsung and Nokia products, with
the goal of determining which product group is providing a higher
margin. 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. “ACME” needs to track profit margin per
brand. 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, the other variance account setup would be similar

Copyright © 2007, Oracle. All rights reserved 9

R12 Product Line Accounting
Setup Steps

• Product Line Setup Steps

Assumption: using the SLA mapping set for your Inventory Product
Line Accounting
1. Set up your product line using SLA mapping set

2. Enter your SLA account derivation rules for Purchase Price Variance and
Standard Cost update adjustment accounts

3. Associate the new SLA account derivation rules to your Journal lines within
an application accounting definition (Accounting Event)

4. Associate the Application Accounting Definition with Subledger Accounting

Method

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R12 Product Line Accounting
Use Case

• Product Line Accounting – Descriptive flexfield

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R12 R12 Product Line Accounting
Use Case
• Product Line Accounting Setup
– SLA Account Derivation Rule

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R12 Product Line Accounting
Use Case
• Product Line Accounting Setup
– SLA Journal Line / Derivation Rule

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R12 R12 Product Line Accounting
Use Case
• Product Line Accounting Setup
– Associate with Events With Journal Lines

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R12 Product Line Accounting
Use Case
• Product Line Accounting Setup
– Similar setup for Standard Cost Update

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R12 Product Line Accounting
Use Case
• Product Line Accounting Setup
– Associate with SLA Method

Copyright © 2007, Oracle. All rights reserved 16

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

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R12 Product Line Accounting
Use Case
• Product Line Accounting Setup
– Items

Copyright © 2007, Oracle. All rights reserved 18

R12 Product Line Accounting
Accounting generated by Cost Management
• The material subledger from 11i still exists

Inventory

Inventory

Receiving

Matl PPV
Overhead
Absorption

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R12 Product Line Accounting
Accounting generated by Sub ledger Accounting
• But Now You have SLA Entries That Go to Your G/L

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R12 Product Line Accounting
Accounting generated by Sub ledger Accounting
• For the Standard Cost Update That Go to Your G/L

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R12 Product Line Accounting
Using Product Line Accounting Functionality

• Brief on Product Line Accounting Functional Area

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R12 R12 Product Line Accounting
Use Case

• Product Line category account

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R12 Product Line Accounting

• Account Derivation Rule would have used a source directly

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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), even for the Standard Cost Update
• Note that most of time SLA rules are Ledger specific

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R12 Product Line Accounting
SLA Summary

• Questions?

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 Thank You

Copyright © 2007, Oracle. All rights reserved 27