The standard cost update procedure lets you define and roll up pending costs, simulate changes to standard costs for analysis, and then update pending costs to the Frozen standard cost type.
Note: You can also update costs using the Supply Chain Cost Rollup. This cost rollup enables you to roll up costs across multiple organizations connected to sourcing rules. You can preserve the buy cost detail visibility and use a lot size multiplier in calculations. See: Rolling Up Supply Chain Costs
If possible, run your cost update at the beginning of your inventory accounting period before transactions have started for the new period.
To update standard costs, define costs and rates, and run the following procedures:
Define a cost type for pending standard costs.
Define pending costs for each of the cost elements: material (inventory items: both components and assemblies), material overhead, resources, overhead, and outside processing.
If you have changed your activity rates, as well as the base material overhead on these activity rates, then you must run the activity mass edit to recalculate the activity based material overhead.
You can also define pending rates for resources and overhead.
Roll up pending costs. This adds up pending costs for all cost elements of an assembly and creates a new pending cost for the assembly.
Print and review preliminary adjustment reports to see potential changes to the frozen standard costs.
Update pending costs to frozen standard costs.
(Optional) Print new standard cost reports.
Caution: If you are using Oracle Enterprise Install Base and have the profile option CSE: Use eIB Costing Hook set to 'Y', then be aware that standard cost adjustments for change in the standard cost of eIB trackable items will be incorrect if your asset subinventories have quantities of these items that have already been converted to fixed assets. For details about the meaning of some of the terms above and for a set of recommendations to avoid incorrect adjustments, see the Oracle Enterprise Install Base and Implementation Guide.