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

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What’s Cost Accounting?
Supply Chain Activities – Procurement, Manufacturing and Distribution
Finance 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 evaluation
Profit measurement
Margin Analytics
Operational Efficiency and Variance analysis
Planning and Decision Support
Make or buy
Import vs Indigenous
Budgeting
Management Reporting

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What’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

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Core 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

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Functional 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

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Technical 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.

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Costing 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

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Fusion Organization Structure
Inventory Org - M1 Inventory Org - M2
Business Unit 1
Inventory Org-D1 Inventory Org-D2
Business Unit 2
Ledger - Legal Entity

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Cost 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..

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Cost 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
Cost
Processors
Inventory
Transactions
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)

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Cost 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

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Cost Organization – Cost Book

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Cost 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’

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Cost Profile
New Reference Data
Sharing feature

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Cost 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

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Configurable Cost Calculation Levels
Valuation Structure
Inventory Org
Sub-inventory
Cost
Processor
Locator
Inventory Org
Valuation Units
Lot
Sub-Inventory
Grade
Serial Number
Inventory
Issue 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

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Valuation Structure Definition

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Cost Calculation Rules
Defined using Cost Profile, which contains:
 Cost Method – Perpetual Average Costing
 Costing Unit of Measure (Primary/Secondary)

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Cost 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

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Cost 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

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Cost Element

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Cost Component Mapping

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Default Cost Profiles

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Item 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 OBIAKPI OBIAReport
Inventory 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 
Metric
BIP
Reports OTBI
Dashboard

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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

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Fusion costing overview_high_level-final