Using Periodic Costing requires that you first install a perpetual cost method. See Setup

Choosing Periodic Cost Method

In Periodic Costing, the cost type is associated with the Periodic Costing method. When you run the Periodic Cost processor and choose cost type, you implicitly choose a cost method.

Ledger

If you enable distributions for a Legal Entity/Cost Type, then associate the same ledger that you used in the perpetual cost type.

If you enable distributions for a Legal Entity/Cost Type, then associate the same ledger that you used in the perpetual cost type.

If you do not enable distributions for a Legal Entity/Cost Type, then you can use a different ledger but the chart of account and currency must be the same as those used in the perpetual cost type.

Setup Steps

In Periodic Costing, the item cost is held at the cost type/organization cost group/period combination.

There are six setup steps specific to Periodic Costing:

• Defining the organization cost group.

• Creating cost types and periodic rates cost types for use in Periodic Costing.

• Associating the organization with an organization cost group.

• Associating the cost type with the legal entity.

• Setting accounting options (required if using Periodic Cost Distributions).

• Assigning periodic accounts (required if using Periodic Cost Distributions).

The end result, once all these associations are set up, is a many-to-many relationship between organization cost groups and cost types through the legal entity.

Step 1: Defining Organization Cost Group

Each organization cost group must be associated with a legal entity.

   To define an organization cost group:

1. Navigate to the Organization Cost Group window.

2. Enter a name for the Org Cost Group.

3. Enter a description for the Org Cost Group.

4. Select the legal entity to associate with the Org Cost Group.

5. Enter the Item Master Organization ID.

6. Save your work.

Step 2: Creating Cost Types and Periodic Rates Cost Types

Oracle Cost Management Periodic Costing methods require the use of cost types and periodic rates cost types (similar to average rates cost type used in average costing for manufacturing). Both are created in the main setup window for cost types. Cost types for Periodic Costing must be multi-org and not updatable. Periodic rates cost types are not restricted. Any user defined cost type can be a periodic rates cost type if it is so designated in the Cost Type Association tab of the Org Cost Group/Cost Type Associations window.

   To create cost types and periodic rates cost types:

1. Navigate to the Cost Types window.

2. Create cost types and periodic rates cost types.

   Cost types must be multi-org and not updatable. If you make these selections, then other options appear available, but are not.

   Periodic rates cost types must be multi-org and updatable.

3. Save your work.

Step 3: Associating Organization with an Organization Cost Group

Once an inventory organization is associated with an Organization Cost Group and transactions have been processed, that association is permanent and exclusive.

An Organization Cost Group can be associated with one or more organizations.

Those inventory organizations which can be associated with an organization cost group meet the following qualifications:

• The organization already belongs to the legal entity.

• The organization is not associated with any other organization cost group.

   To associate an organization with the organization cost group:

1. Navigate to the Org Cost Group/Cost Type Associations window.

2. Select the appropriate legal entity.

3. Navigate to the Org Cost Group Associations tab.

4. Select the organization cost group.

5. Select the organizations you wish to associate with this cost group.

   Only those organizations which met the qualifications listed above will be available for selection.

6. Save your work.

Step 4: Associating Cost Type with Legal Entity

   To associate the cost type with legal entity and select cost method:

1. Navigate to the Org Cost Group/Cost Type Association window.

2. Select the appropriate legal entity.

3. Navigate to the Cost Type Associations tab.

4. Select the Cost Type.

5. Select a value for the Cost Method.

   The available values are:

   Incremental LIFO

   Periodic Average

6. Select the Ledger.

7. Select the Periodic Rates Cost Type.

8. Select the Enable Iterative Periodic Average Costing indicator to enable the Iterative Periodic Average Costing (IPAC) processor at the legal entity and cost type level. If you leave this unchecked, then the application uses the standard periodic cost processor.

   See: Iterative Periodic Average Costing (IPAC) and Setting Up Iterative Periodic Average Costing (IPAC).

9. Select the Material Relief Algorithm indicator to Use Pre-defined Materials, or Use Actual Materials.

   If there have been no prior WIP transactions for the chosen Cost Type in all previous periods, then you can use the relief algorithm option to relieve material using the quantity that is actually used, or using the quantity defined in the BOM. If there are WIP related transactions based on actuals, then relief costs for all subsequent transactions cannot be based on BOM. The relief algorithm is only applicable for components. Resource and overhead are always relieved using the actual quantity.

10. Select the Restrict Documents by Process Upto Date indicator if you want to run partial period processing.

    You can run a partial period by entering the date in the parameter Process Upto Date field in the periodic acquisition processors.

11. Save your work.

12. If you need to set accounting options, choose Accounting Options and follow the instructions in the next section. See Step 53: Setting Accounting Options

    See: Setting Up Iterative Periodic Average Costing (IPAC) for setting the Iterative Periodic Average Costing (IPAC).

Step 5: Setting Accounting Options (Optional)

Using the Cost Type Associations Accounting Options window, you can set options pertaining to the creation of accounting entries (cost distributions) and posting (transferring) to General Ledger. If you do not Create Accounting Entries, you cannot post to the General Ledger from Periodic Costing, and therefore General Ledger options are unavailable to you.

You can choose to submit the Journal Import at the same time as the transfer to General Ledger or as a separate process.

You can check Allow Override at Program Submission which allows the user to change these options:

• Journal Import

• Transfer mode (detail or summary) .

   To set your accounting options:

1. Navigate to the Cost Type Associations Accounting Options window.

2. Check Create Accounting Entries if you wish to have Periodic Cost distribution entries created.

   If you do not check this option, all the other options are unavailable to you. Exit from this window.

3. Select an Accounting Library. The options are:

   • US GAAP

   • PAC Brazil

   Note: Landed Cost Management (LCM) related accounting is only supported for US GAAP.

4. Check Post entries to GL if you wish to post your Periodic Cost distributions to the General Ledger.

   This enables options for additional options.

5. Make selections on the following options:

   • Allow Override at Program Submission.

   • Transfer to GL Interface. Choose one:

     • In Detail

     • Summarize by Accounting Date

     • Summarize by Accounting Period

   • Submit Journal Import.

6. Save your work.

Step 6: Assigning Periodic Accounts

This step is required if you are using the Periodic Cost Distributions Processor.

Periodic Cost Accounts are used during Periodic Cost distributions. The periodic accounting library may use these accounts to create accounting entries. Users can only specify these accounts if distribution is enabled for the legal entity cost type. There are two sets of accounts:

• Cost group category level accounts: used to perform periodic inventory accounting based on categories defined in the master item organization for the cost group.

• Cost group level accounts: used independently of the category to define variance and inventory offset accounts.

   To assign periodic accounts:

1. Navigate to Periodic Account Assignments.

2. Select your legal entity and cost type association.

3. Select the cost group.

4. Choose the MTL Account tab to assign accounts for the category.

5. In the category column, select item family and class.

6. Select accounts for the following:

   • Material

   • Material Overhead

   • Overhead

   • Resource

   • Outside Processing

   • Expense

   • Bridging

   • Non-Invoice Sales orders

   • Non-Invoiced Revenue

7. Choose the Cost Group Accounts tab to assign variance accounts.

8. Select an account for Cost Variance.

9. Select an adjustment account for Retroactive Price Adjustment Account if you are using the Retroactive Pricing functionality.

   This account must be entered in your initial setup only.

   Note: The application prevents retroactive price adjustment transactions when the Purchase Order is Landed Cost Management (LCM) enabled.

   See: Retroactive Pricing

10. Enter a Landed Cost Absorption account and a Landed Cost Variance account when Landed Cost Management (LCM) is enabled for any of the inventory organizations that belong to PAC Cost Groups.

11. Save your work.

    You can choose the Open button in the MTL Accounts tab to view the accounts in list format.

    Note: Accounts are required when Landed Cost Management (LCM) is enabled for any of the inventory organizations that belong to the PAC cost group.