Oracle EBS ERP user group presentation. Originally presented in June 2005 at the Connection Point 2005 conference in Dallas. Revised in 2007. Addresses EBS 11i but relevant to R12!

1. Oracle E-Business Suite: Cost Cutoff Date to Retroactively Cost Transactions Eric Guether eguether@gmail.com

2. Objectives Learn how to defer the costing of transactions through use of the Cost Cutoff Date (CCD) Realize the importance of CCD when updating standard costs Understand lessons learned: Potential temporary adverse effects on Inventory balance reports Impact on intercompany A/R invoicing

3. Release Scope EBS 11i functionality (release 11.5.7 & higher) Examples shown are from EBS release 11.5.10.2 Should be completely applicable to EBS Release 12

4. Business Case Company practice is to update standard costs every six months as of: October 1st[Cost Period: Oct. 1, 2006 to March 31, 2007] April 1st[Cost Period: April 1, 2007 to Sept. 30, 2007] My company does not finalize new costs until after April 1st / October 1st Oracle’s Assumption: Most companies have new costs finalized before the start of the new cost period and just want to defer transaction costing on first 1 or 2 days of new cost period Standard cost updates typically occur at my company on the 10th day of the new period [April 10th / Oct. 10th]

5. Dilemma Before Release 11.5.7 How to value early April / Oct. transactions at the new costs prior to performing the standard cost update? Still must value March- / Sept.- dated transactions at the old costs even if created in early April / Oct. Cannot simply shut-off the Cost Manager Might stop the costing of March / Sept. transactions created in early April / Oct., such as pending transactions resolved on 1st of April / Oct.

6. Off-line Workaround in 11i (Prior to 11.5.7) Record early April / October inventory, WIP, shipping, and PO receiving transactions off-line (outside of Oracle EBS 11i) until the standard costs are updated on April 10th / Oct. 10th Retroactively record (enter) early April / October transactions in EBS after the standard cost updates Issues: Extra, unnecessary work to record offline Unreliable / unusable inventory quantities in EBS for a week or more Shipping and export documents prepared manually (not via EBS) for a week or more Violated automated business process controls

7. Solution: Cost Cutoff Date Inventory organization parameter Controlled by the simple entry of one Cost Cutoff Date for the inventory org Introduced in EBS release 11.5.7 Entirely met our needs Eliminated the need to record transactions outside of EBS 11i

8. Parameter Setup Organization Parameters –> Costing Information tab

9. Functionality Intended to keep “new period” transactions uncosted until you finish your standard cost updates for the org If the Cost Cutoff Date = 01-APR-2007, then transactions with G/L Date of: 01-APR-2007 or later will not be costed yet 31-MAR-2007 or earlier will be costed at the current [“old period”] costs, even if created on or after April 1st

11. Subinventory Transfer

12. Interorg Transfer

13. Receiving

14. Pick Confirm

15. Ship Confirm / Sales Order Issue

17. PO Receiving (including PPV)

18. Returns to Supplier

19. WIP module

20. Discrete WIP assembly completion

21. Discrete WIP component issue

24. A record on the MTL_MATERIAL_TRANSACTIONS table

25. Allows the transaction quantities to be recognized by the EBS 11i modules

26. Its COSTED_FLAG = ‘N’

27. Indicates the record has not yet been costed

29. Receive 5 units of item LASER123

30. Standard Cost

31. $1,200 per unit through end of March

32. $1,000 starting April 1st (updated on 04-APR)

33. Transaction date, 01-APR-2007, is equal to the cutoff date of 01-APR-2007

38. Receive & deliver to Inventory (no inspection) 200 units of item DIODE-5002

39. PO Unit Price = $0.90

40. Standard Cost

41. $1.25 per unit through end of March

42. $1.00 starting April 1st (updated on 04-APR)

45. Transaction Value Historical Summary

46. Transaction Balance Historical Summary

47. Cause: Reports fail to estimate the cost of some uncosted WIP and PO Receipt transactions when backing into historical balance

48. Issue resolves itself as soon as the uncosted transactions get costed

51. Parent record = “Sales order issue” material transaction type [action = “Issue from stores”]

52. The CCD indirectly defers creation of intercompany A/R invoices in the new cost period when it directly defers the costing of the parent record

54. Price List for I/C A/R Invoices

56. Using Cost Cutoff Date functionality can benefit an organization’s cost update process

57. Organizations utilizing EBS intercompany invoicing should understand the impact of transaction cost deferral on the intercompany A/R creation process