Material subelements classify material costs, such as plastic or metal. A material subelement has a default activity and a default basis type assigned to it.

Prerequisites

• To define, update, or delete cost information, the Material Subelements: Maintain security function must be included as part of the responsibility. See: Cost Management Security Functions.

   To define material subelements:

1. Navigate to the Material Subelements window.

2. In the Defaults tabbed region, enter a material subelement name.

3. Select the default activity. This activity is defaulted each time the subelement is used to define an item cost.

   Activities are processes or procedures that consume costs and time. In addition to the cost element and subelement, all costs are associated with an activity. Activities may be directly related to building items, such as runtime or setup time; or they may be indirect, such as purchase order generation, payroll, and engineering change order activities. See: Defining Activities and Activity Costs.

4. Select the default basis for the material subelement. This basis type is defaulted when you define item costs. Basis is the method used to determine how to charge a transaction or apply product costs. The options are as follows:

   Item: Used for all subelements. For material and material overhead subelements, you charge a fixed amount per item. This is the default.

   Lot: Used for all cost elements. The item cost is calculated by dividing the order cost by the lot size.

5. Optionally, select a date on which to inactivate the material subelement.

   Note: You cannot disable the default material subelement for the organization.

   A disabled material subelement cannot be used to define a material cost when defining item costs, or to define a default material subelement when defining organization parameters.

   You can continue to use item costs previously defined for the inactive material subelement.

   To associate an expenditure type with a subelement:

1. Select an expenditure type.

   If the Project Cost Collection Enabled parameter in the Organization Parameters window is set, you must associate an expenditure type with each subelement. See: Organization Parameters Window

   You can only select expenditure types that belong to the Inventory expenditure class. Expenditure types are defined in Oracle Projects.

2. Save your work.

   You can use material overhead and overhead cost subelements to add indirect costs to item costs on either a percentage basis or as a fixed amount in both standard and average costing organizations.

   Each overhead subelement has a default basis, a default activity, and an absorption account. The overhead absorption account offsets the corresponding overhead cost pool in the general ledger.

   You can base the overhead charge on the number of resource units or percentage of resource value earned in the routing operation. Or, you can set up move-based overheads where the rate or amount is charged for each item moved in an operation. To do this, use the Item or Lot basis types.

   You can base the material overhead charge on a percentage of the total value, which is earned when you receive purchase orders or perform WIP completion transactions. Or, you can use the Item or Lot basis types.

   You can apply each of these subelements using different basis types for increased flexibility. Material overhead is earned when an item is received into inventory or completed from work in process. Overhead, based upon resources, is earned as the assembly moves through operations in work in process.