• FIFO Costing is organization specific.

  • All items in inventory for an organization are valued at FIFO, when you specify FIFO as the primary costing method for the organization. You can still maintain other costing methods, such as standard or weighted-average for other inventory organizations. But each organization can have only one primary costing method.

  • You cannot share costs across organizations using FIFO costing.

  • You can specify the cost type that stores all your resource and overhead rates for FIFO costing as the rates cost type.

• Receipts are valued at purchase order prices.

  When you deliver a purchase order receipt to inventory, it is valued at the purchase order price. The costs to your inventory consist of the purchase order cost and any specified material overhead earned.

• Inventory is maintained in receipt-based layers only.

  • Layer creation: Receipts into inventory create new layers with their own quantity and cost.

  • Layer consumption: Issues consume earliest layers that still have quantity balance. Issue transactions are costed based on the cost of the consumed layers.

    You can specify the first inventory layer to be consumed, using the layer hook (client extension).

The return transactions (such as returns to vendor, WIP component returns, WIP assembly returns) are the exception to the FIFO flow.

• Layer creation is minimized for item and organization combinations.

  • Layer creation transactions following a transaction for the same type, cost, and cost group for the same organization - do not create a new layer as in previous versions of Oracle Cost Management. The item quantity is added to the last layer created. New layers are created when the next transaction is of a different type, cost, or cost group. The qualifying transactions include:

    • Return material authorizations

    • Miscellaneous receipts

    • Account receipt

    • Account alias receipt

    Note: New layers are created for transactions where the cost is defined by the user, rather than calculated by the application. This includes transactions that meet all the qualifying conditions and have an equal cost value.

• WIP components are held in layers within a job.

  Component issues are held in layers within each job. Each issue creates a WIP layer. In addition, component issued to a job will not lose their inventory layer identification and costs.

• Items are returned to inventory as new layers.

  • WIP component return

    A new inventory layer is created when a component is returned to inventory from WIP. The return transaction is valued at the latest WIP layer costs. The last layers issued to a job at a specified operation are the first layers returned to inventory.

  • RMA receipts

    A receipt of customer return also creates a new layer at the same cost as the original shipment. This new layer is created as a latest layer cost for LIFO without a sales order reference, an earliest positive layer cost for FIFO without a sales order reference, or an original sales order issue cost if the RMA has a sales order reference.

• Returns to vendor are returned from inventory at original layers and layer costs.

  Unlike most of the other issues from inventory, returns to vendor and assembly returns do not consume the earliest receipt layers. They are layer-identified transactions. In other words, they are issue transactions that have reference to specific layers.

  • Returns to vendor consume the layers created for the original receipts.

  • Assembly returns consume the layers created for the original completions.

• Layers are maintained at the cost group level in Project Manufacturing.

  Layers are maintained at the project cost group level within an inventory organization. Issues from a cost group consume the earliest layers within the cost group.

  Note: Cost layers are not held at subinventory level.

• Layer cost can be updated by the user.

  • At any given time during an open period, you can perform a cost update to revalue your inventory. You will have the option to update the costs of an item layer by a specified amount, a percent of the selected layer's costs, or user -entered layer costs by cost element and level.

  • The cost update process calculates the adjustment values for your inventory layer cost, and creates corresponding adjustment accounting entries.

    Note: Just as in average costing, you must specify the items to be updated. You cannot update all items or a range of items. You can update only a single receipt layer for any given item. You can update only one layer at a time.

• Both FIFO item costs and layer costs are maintained at elemental levels.

  • Both the FIFO item cost and the layer costs are maintained at elemental levels and by cost groups.

  • The FIFO item costs, which is the weighted average of layer item costs, is used for current inquiries and reports, such as inventory by sub-inventory, by category, and so on. Functionality (such as copy cost, mass edits, cost rollup) also uses FIFO item costs in its process.

  • The layer costs are used to value the unconsumed inventory layers and to cost transactions based on FIFO cost flow.

• Reports by layers are available.

  Most standard reports that are currently available for average costing are also available for FIFO costing. In addition, you have reports at the layer level.