fusion costing overview_high_level-final

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Fusion Costing Overview

Version 1.0 Released in Dec ‘07

June 2nd ,2010

2Oracle Rightshore™ Delivery© Copyright Capgemini 2005 All Rights Reserved

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What’s Cost Accounting?

What’s new in Fusion ?

Business Flows

Functional Flow

Technical Architecture

Costing setups

Cost Processing

Reports and Analytics

Agenda


SOLUTION CENTERWhat’s Cost Accounting?

Supply Chain Activities – Procurement, Manufacturing and DistributionFinance Function – Payables Invoice, Revenue Recognition

Measurement of cost for a cost object.

Cost Object- It represents any activity/purpose for which separate measurement of cost is desired.

Cost objects supported• Product• Job/Batch

Maintain Cost Accounting Records• Accounting Distributions

Balance Sheet

AssetLiability

Current Assets Inventory Finished Goods WIP Raw Material

Income Statement

Cost of Goods Sold Manufactured Trading

Financial Reporting

Performance evaluationProfit measurementMargin AnalyticsOperational Efficiency and Variance analysis

Planning and Decision SupportMake or buyImport vs Indigenous Budgeting

Management Reporting


SOLUTION CENTERWhat’s new in Fusion ?

Robust Cost Accounting Functional Framework

Multiple representation

Item level cost method

User defined cost granularity

Dual Unit of Measure support

Framework for landed costing

Track internal profits

And more….

Service Oriented Architecture – Vision to support multiple source systems


SOLUTION CENTERCore Business Flows

Procurement

Simple purchases – Support Acquisition Cost on Invoice

Global Procurement – Transfer Price, PO Price

Inventory Flows

Receipts and Issues

Intra-Organization Transfers

Inter-Organization Transfers – Transfer Price, Cost Plus

Cycle counts/Physical Counts

Order Management

Simple sales issues and returns

Drop ship sales issues and returns – Transfer Price, Cost Plus

Revenue and COGS Matching

Absorption of Overhead Costs

Multiple cost drivers

Multiple levels of rates definition

Review Under/Over absorption of overheads


SOLUTION CENTERFunctional Flow

Source Application

Inventory Transactions Payables Invoices Revenue Recognition Events

Run/Schedule Interfaces

Cost Accounting RecordsRun Cost Processor

Pre-Processor

Average Cost Processor

COGS Recognition

Distribution Processor

Create Cost Transactions

Compute Item Costs, Absorb Overheads

Match COGS to Revenue

Create Cost Distributions

Create Journal Entries and Post to GL Reports and Analytics


SOLUTION CENTERTechnical Architecture

Service Oriented Architecture (SOA)


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Cross-Instance Cost & Financial Flow

INVPO WIP SHIP INVPO WIP SHIP INVPO SHIP

ETL & Master Data Management

PO Receipts

Inventory

Shipments

Costing GL

Payables

Receivables

Fusion Costing imports receipt, inventory, manufacturing and shipment transactions from multiple AU instances and manages product costing and supply chain accounting in Fusion.


SOLUTION CENTERCosting Setups

Organization Structure

Cost Organization

Cost Book

Cost Profile

Cost Methods

Valuation Structure and Valuation Unit

Cost Element

Cost Component

Analysis Groups

Overheads Absorption

Expense Pool

Overhead Rules


SOLUTION CENTERFusion Organization Structure

In ve n to ry O rg - M 1 In ve n to ry O rg - M 2

B u s ine ss U n it 1

In ve n to ry O rg -D 1 In ve n to ry O rg -D 2

B u s ine ss U n it 2

L e d ge r - L e ga l E n tity


SOLUTION CENTERCost Organization

• Group of Inventory Organizations• Share costs• Uniform cost accounting policies• Centralized cost accounting process• Separate physical ownership from legal ownership

• Business Rules• Cost Organization associated with Legal Entity• Can contain one or more inventory organizations belonging to a single Legal

Entity• Inventory Organizations can span business units


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Cost Organization..


SOLUTION CENTERCost Book - Multiple Representation

Currency Method Absorption

Cost Book 1 USD Average Full

Cost Book 2 Euro Average Full

Cost Book 3 USD Average None

Cost Book 4 USD Standard Full

CostProcessors

InventoryTransactions

Financial Ledgers

Primary Ledger – US GAAP

France Euro Reporting

Management – Lean

Management – Shop Floor

Corporate Reporting Requirements

GAAP Cost Book 1 supports US GAAP reporting used for external US-based regulatory reporting

Euro Cost Book 2 supports French ’plan comptable’ reporting used for external French country regulatory reporting

Lean Cost Book 3 supports Lean reporting used for marginal cost based performance benchmarking and reporting

Shop Floor Cost Book 4 supports Shop Floor reporting in standard cost operating environments (v1.1)


SOLUTION CENTERCost Book - Multiple Representation

• Achieved through Cost Books• Cost Org-Cost Book mapped to Ledgers• Mandatory association of cost organization with a primary ledger• Book assigned to a primary ledger becomes ‘Primary Cost Book’• Ledger-less cost books for cost simulation • Flexible transaction processing for Secondary Books

• Option to disable journal entries • Option to disable cost processing

• Combination of Cost Organization and Cost Book inherit ledger attributes from General Ledger

Currency Calendar Chart of Accounts Sub Ledger accounting method

• Date effectively to support• Reporting changes• Organization structure changes • Mergers & Acquisitions


SOLUTION CENTERCost Organization – Cost Book


SOLUTION CENTERCost Profile

Set of attributes that determines the cost computation rules• Cost Sharing

• Specify level of cost sharing• Configured using Valuation structure and Valuation unit

• Cost Calculation Rules• Cost Method• Costing Unit of Measure

• Cost Granularity• Cost Elements• Cost Component Mapping

• Can be defined at different levels• Cost Organization – Cost Book using ‘Default cost profiles’• Item Category using ‘Default cost profiles’• Item using ‘Item cost profiles’


SOLUTION CENTERCost Profile

New Reference Data Sharing feature


SOLUTION CENTERCost Sharing

• Valuation Structure• Determines the level of cost sharing• Cost Sharing levels

• Cost Organization• Inventory Organizations• Sub Inventories• Locators• Grade• Lot• Serial

• Valuation Unit• Specific identification for a cost sharing entity• Example: Inventory Org M1, Lot#12233, Sub Inventory FG• Manual or Automatic creation based on Valuation Structure definition


SOLUTION CENTERConfigurable Cost Calculation Levels

Valuation Structure

Inventory Org

Sub-inventory

CostProcessor

Locator

Inventory Org

Valuation Units

Lot

Sub-Inventory

Grade

Serial Number

InventoryIssue Trx

Cost processor calculates cost based on attributes of the Valuation Structure. In this example, item cost is calculated and maintained by sub-inventory and by inventory organization

Inventory Org - Miami $12.50

Sub-inventory A $12.00

Sub-inventory B $9.50

Sub-inventory C $16.00


SOLUTION CENTERValuation Structure Definition


SOLUTION CENTERCost Calculation Rules

Defined using Cost Profile, which contains:

Cost Method – Perpetual Average Costing

Costing Unit of Measure (Primary/Secondary)


SOLUTION CENTERCost Granularity

Definition of break up of costs

Unlimited cost elements representing cost break up

Behavior of cost element determined by element types:

Material

Overhead

Profit in Inventory

Cost break up from source systems captured through Cost Components

Purchase Order Cost Components

– PO Price, Freight, Tax, Invoice Variance

Inter-Organization transfers

– Transfer Price, Source Organization Cost, Freight

Miscellaneous Transactions

– User defined

Cost Components mapped to appropriate Cost Elements

User defined views of cost through Analysis groups

Each view can contain selected cost elements as per need

Classification of Cost Elements through Analysis Codes

– User defined cost buckets such as Fixed, Variable, Direct Material, Factory Overheads, Marketing Expenses


SOLUTION CENTERCost Element

Cost Element Cost Element Type Cost Component Analysis Groups

Marginal Costing Cost Sheet

Direct Material Material PO Price Variable Direct Material

Indirect Material Material Non Recoverable Tax Variable Direct Material

Direct Material Material Transfer Price Variable Direct Material

Handling charges Overhead Variable Factory Overheads

Inspection Overhead Fixed Factory Overheads

Utilities Overhead Fixed Factory Overheads


SOLUTION CENTERCost Element


SOLUTION CENTERCost Component Mapping


SOLUTION CENTERDefault Cost Profiles


SOLUTION CENTERItem Cost Profiles


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Transaction Processing

Unified cost processor using Run Control

Cost Processing split into multiple stages

Pre-Processor

Perpetual Average Cost Processor

COGS Recognition Process

Distribution Processor


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Cost Processing


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Item Cost


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Item Cost Details


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Cost History


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Cost Comparison


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Cost Accounting Distributions


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Reports and Analytics

OLTP OBIA KPI OBIA ReportInventory Valuation Margin Analysis In-Transit Valuation * Costing Sub Ledger Balances Review Accrual Reconciliation Un-invoiced Receipts Accrual COGS and Revenue Matching Accrual Clearing Item Cost and Value Trend Item Cost Breakdown Period Validation Status Receiving Balances Overhead Assignment

MetricBIP

Reports OTBIDashboard


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Sample Report


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Cost Accountant Dashboard


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Q&A

fusion costing overview_high_level-final

Documents

cost distributions

cost objects

separate measurement

us gaap reporting

product costing

supply chain accounting

euro average

usd average