1 02 Volz

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
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
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
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
Subledger Accounting Method (SLAM)
Setup Steps
1. Create account derivation rules
2. Create journal line types
3. Create a journal lines definition
(link the journal line type to the account derivation rule)
4. Create an application accounting definition
(copy an existing definition and modify it)
5. Create a subledger accounting method
(copy standard accrual and create a new one)
6. Assign it to a Ledger
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 Logical grouping of events which

CLASS have similar kind of accounting
The most granular level of

EVENT business event which has
TYPE accounting impact
Setup and Process
PROCESS
JOURNAL ENTRY SETUPS
Enter Transaction(s)
Define/copy and modify
account derivation rules
Cost Manager

journal line types
Create Accounting* Transfer Journal Entries to GL

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.
Setup and Process
Accounting
Configurations
Subledger
Transactions Journal Entries
GL
Accounting Journal Entries
Program and Balances
Accounting Events Subledger

Balances
Journal Entry Setup
Cost Management SLA
Case Example:
Discrete Costing-Product Line Accounting
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)
Cost/SLA Mapping Set Capability
Cost SLA Mapping Set Capability:
PPV by product Line
Product Line Setup Steps Using SLA mapping set
1. Enter your SLA account derivation rule for Purchase

Price Variance accounts
2. Associate the new account derivation rule to your

Journal Line Type
3. Associate the Application Accounting Definition with

Subledger Accounting Method
Product Line Accounting Descriptive flexfield
Product Line Accounting Item Descriptive FF
Mapping set Account Derivation Rule
Mapping set Account Derivation Rule
SLA Journal Line / Derivation Rule
Associate Journal Lines Definition to the Event Class
Note the same ADR is usable for Standard Cost Update
Note the same ADR is usable for Standard Cost Update
Associate SLA Definition to the SLA Method/Ledger
Assign product line code to the inventory item
The material subledger from 11i still exists
Inventory
Inventory
Receiving
Matl PPV
Overhead
Absorption
SLA Entries That Go to Your G/L
For the Standard Cost Updates That Go to Your G/L
Category Accounting
Cost Accounting migrated to SLA in R12.1
Product Line Category Accounting
Create a new
structure under
the key flexfield
Item Category
Create a new
structure under
the key flexfield
Item Category
Create category
codes
Create a new
structure under
the key flexfield
Item Category
Create category
codes
Create category
set
Create a new
structure under the
key flexfield Item
Category
Create category
codes
Create category set
Assign Product
Line Accounting
functional area
category set
Assign product line category accounts
Account Derivation Rule would have used a source directly
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.
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.
Oracle Process Costing:
MAC transitioning to SLA
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
11i OPM
GMI Order
Purchasing GMD, GME
(OPM Inventory) Management
Cost Setup Calculate Cost Store Costs MAC Oracle GL
R12 OPM
Oracle Order
Purchasing GMD, GME
Inventory Management
Cost Setup Calculate Cost Store Costs SLA Oracle GL
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.
11i OPM
General Ledger
I
n
t
e
Subledger GL Export r Journal Import Journal Posting
f
a
c
e
For G/L integration, discrete costing works the same as OPM costing
R12 OPM
OPM
Payables
Oracle Subledger
Accounting Oracle General
Ledger
Receivables
Projects
For G/L integration, discrete costing works the same as OPM costing
OPM MAC SLA
Completed material Completed material
and/or resource and/or resource
transactions. transactions.
OPM Costing Engine OPM Costing Engine

generates costs. generates costs.
Cost Pre-processor
will create
accounting Events
OPM Subledger SLA accounting

process processes program processes
these transactions to the events to create
create Journal entries the journal entries
OPM MAC SLA COMMENTS
Fiscal Policy Retained with few modifications
Event Fiscal Policy Retained with few modifications
Source Process Category
Event Event Entity
Sub-Event Event Class
Account Titles Journal Line Types (JLT)
Accounting Template Application Accounting Users can define their own AADs or
Definitions (AAD) modify seeded information
Account Mapping Attributes (SLA) Sources SLA sources are used in ADRs
Priorities and Account Account Derivation Rules (ADR) More flexible. Mapping can be done
Mapping at Accounting flexfield level as well
as segment level
Test Mapping Test Accounting Builder (TAB)
OPM Currency, OPM Ledger, Use GL setups
OPM Exchange Rates
OPM MAC SLA COMMENTS
Test and Actual Subledger Draft and Final Accounting

Accounting
Subledger Program Accounting Pre-Processor
Run Subledger for multiple Supports multiple valuation In OPM there can only be
valuation/cost methods for methods one representation at a
a ledger time. SLA supports
multiple representations at
the same time
Run Subledger process for Run Pre-Processor by Process Flexible. User can have
a functional area Category any number of categories.
Assigned to one or more
event classes
Detailed Subledger Report Is retained and has been
modified to use SLA
repository
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
Update the Account Derivation Rule conditions.
Ex: Add Item/Item Class/Organizations
Validate the Application Accounting Definition
Run OPM Accounting Pre-Processor

Run OPM Accounting Pre-Processor
Run Create Accounting in Draft mode
Check Create Accounting report and Journal

Entries report
Run Create Accounting in Final mode to create GL

accounting entries
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.
Acknowledgements of assistance:
Herve Yu Oracle Cost Management Development Manager
Diane Struebel Schreiber Foods Cost Manager

OAUG Process MFG Cost Sub-Committee Lead
Additional information available from:
R12 Oracle Subledger Accounting Implementation Guide
R12 Oracle Cost Management User Guide
R12 Oracle Process Manufacturing Cost Management - User Guide
THANK YOU
Appendix
Professional Background for Douglas Volz
Douglas Volz Consulting, Inc.

Helping clients use Oracle Applications since 1990
US Cell: +1 510 755-7050

davolz@comcast.net
www.volzconsulting.com
Douglas Volz
Professional Background
Doug Volz is a Senior Architect and Advisor for Oracle Application projects, with a particular interest in
Project and Cost Management. He has 30 years accumulated experience, including 5 years in Oracle
Development (co-designing Oracle Cost Management) and 12 years in industry in Cost and Accounting
Management positions. His Manufacturing and Cost systems experience covers project management,
software design/development, delivery and consulting services, for both Oracle Corporation, and
multiple international consulting firms. Prior to his systems career, Mr. Volz also held numerous
management accounting positions for telecommunications, defense, and electronics companies.
In his consulting roles, Doug has served over 100 clients. Many of these were multi-org, multi-currency
with global footprints. Countries include US, Mexico, UK, Netherlands, Belgium, Taiwan, P.R.O.C.,
Norway, Japan and Germany.
Doug leads the Cost Sub-Committee, for the OAUG Discrete Manufacturing Special Interest Group.
He also advises and participates on the Oracle Customer Advisory Board for Fusion Costing.
Core Expertise Experience

Multi-organization, Multi-currency ERP
Sample of clients served:
Implementations
Beckman Coulter (US)
Project Management and Senior Project Advisor
Core manufacturing processes Onninen AS (Norway)
Cost Management Matsushita (UK, Mexico)
Inventory NTL (now Virgin Media)
Bills of Material Idec Izumi (Japan)
WIP
Motorola (UK, US)
Systems Integration and Data Conversions
Logitech (US, Taiwan, P.R.C.)
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Cost Accounting As You Want It

EBS R12 Cost Accounting with SLA

OAUG Discrete MFG Cost Sub-Committee Lead

Oracle Discrete Costing SLA enhancements

Case example: Discrete Costing-Product Line

Oracle Process Costing MAC transitioning to SLA

SLA removes limitations for recording COGS and

Gives you the ability to record inventory and WIP accounts

ENTITY Material Transaction, Receiving

EVENT Logical grouping of events which

The most granular level of

Define/copy and modify

Create Accounting* Transfer Journal Entries to GL

Define/copy and modify

Receiving Accounting can be generated in the Purchasing responsibilities

These requests have an option to transfer the entries created to

Accounting Events Subledger

Cost Management SLA

Discrete Costing-Product Line Accounting

We want to track variances by cell phone brands

We are going to use 2 different ways to address this same

Product Line Setup Steps Using SLA mapping set

1. Enter your SLA account derivation rule for Purchase

2. Associate the new account derivation rule to your

3. Associate the Application Accounting Definition with

Create category set

Assign product line category accounts

In R12 SLA is the Oracle R12 accounting platform and Costing

One caveat: Pre-Release 12 subledger accounting reports are

Converged inventory model

Inventory Organizations that are Process will use Process

Process users are denied access to Discrete Costing

Sub Ledger Architecture (SLA) replaces MAC

Cost Setup Calculate Cost Store Costs MAC Oracle GL

Cost Setup Calculate Cost Store Costs SLA Oracle GL

Subledger accounting is an intermediate step between

Each transaction that requires accounting is represented

OPM Costing Engine OPM Costing Engine

OPM Subledger SLA accounting

Test and Actual Subledger Draft and Final Accounting

Subledger Program Accounting Pre-Processor

Validate the Application Accounting Definition

Run OPM Accounting Pre-Processor

Run Create Accounting in Draft mode

Check Create Accounting report and Journal

Run Create Accounting in Final mode to create GL

Herve Yu Oracle Cost Management Development Manager

Diane Struebel Schreiber Foods Cost Manager

Professional Background for Douglas Volz

Douglas Volz Consulting, Inc.

US Cell: +1 510 755-7050

Core Expertise Experience

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