You can define any number of accounting classes. The valuation and variance accounts that are associated with these accounting classes determine which accounts are charged and when.
You can define accounting classes for each type of discrete production you use: standard discrete, asset non-standard discrete and expense non-standard discrete. You must assign an accounting class all your discrete jobs.
Standard discrete accounting classes can be used to group job costs. For example, if you build subassemblies and finished goods, you can define your accounting classes so that you can separately value and report the costs associated with subassembly and finished goods production. Standard discrete accounting classes can be automatically defaulted when you create discrete jobs. See: WIP Accounting Class Defaults, Product Line Accounting Setup, and Discrete Parameters.
When you define an accounting class, you must assign valuation and variance accounts to it. When you issue materials to a job that uses this accounting class, the appropriate valuation accounts are charged. When the job is closed, final costs and variances are calculated and posted to the variance and valuation accounts. When the accounting period is closed, these journal entries are automatically posted to the general ledger.
Non-standard discrete accounting classes can be used to group and report various types of non-standard production costs, such as field service repair or engineering projects.
For example to track recurring expenses - machine maintenance or engineering projects - with non-standard jobs, you can define and assign an accounting class with a type of expense non-standard to these jobs. The valuation accounts carry the costs incurred on these expense jobs as an asset during the period and automatically writes them off to the variance accounts at period close.
On the other hand, if you use non-standard discrete jobs to track production costs as assets, you can define and assign an accounting class with a type of asset non-standard. Asset non-standard discrete jobs are costed the same as standard discrete jobs. Valuation accounts are charged when material is issued to a job and final costs and variances are calculated and posted to the appropriate variance and valuation accounts when the job is closed.
Repetitive accounting classes are used to group production costs and must be assigned to each repetitive line/assembly association that is created. Every schedule for that assembly on that line uses these accounts. The accounts are charged whenever you transact against the line/assembly association. Repetitive accounting classes can be automatically defaulted when you associate repetitive assemblies with production lines. See: WIP Accounting Class DefaultsProduct Line Accounting Setup.
You can analyze repetitive manufacturing costs by assembly regardless of the line on which it was manufactured by using the same accounting class for all lines that build that assembly. You can use the same class for all assemblies on a line to do line based cost reporting or you can use a different accounting class for every line/assembly association.
Oracle Shop Floor Management extends work in process functionality using network routings, lot based transactions, and yield based operational costing. If you have Oracle Shop Floor Management installed, you can define accounting classes for standard production and expense non-standard jobs.
Standard jobs control the material, resources, and operations required to build an assembly and collect costs. When you build lot based jobs, the standard lot based accounting class is used to separately value and report costs associated with yielded production at each individual operation on the routing.
You must assign valuation and variance accounts to it. When you issue materials to a job that uses this accounting class, the appropriate valuation accounts are charged. When the job is closed, final costs and variances are calculated and posted to the variance and valuation accounts. When the accounting period is closed, these journal entries are automatically posted to the general ledger. If Estimated Scrap Accounting is enabled, both Estimated Scrap accounts are required. If this feature is not enabled, the Estimated Scrap account fields are disabled.
Non-standard jobs control material and collects costs for miscellaneous activity. These jobs are used for expense work orders for testing, prototypes, and rework where operation yield costing is not considered. You can perform all transactions (moves, jumps, scrap, splits, and update assemblies or routings) with the exception of job merge.
Maintenance accounting classes are used to group costs for work orders used in Oracle Enterprise Asset Management (eAM). For example, if you are creating work orders for plant maintenance activities, you can define your accounting classes to separately value and report the costs related to asset. Maintenance accounting classes are automatically defaulted when you create eAM work orders.
When you define an accounting class, you must assign valuation and variance accounts to it. When you issue materials to a work order that uses this accounting class, the appropriate valuation accounts are charged. When the work order is closed, final costs and variances are calculated and posted to the variance and valuation accounts. When the accounting period is closed, these journal entries are automatically posted to the general ledger.
WIP accounting class valuation accounts are charged when you issue components, move assemblies, complete assemblies, and charge resources.
Variance accounts associated with Standard Discrete and Non-standard Asset accounting classes are charged when jobs are closed. Variance accounts associated with Expense Non-standard Discrete, and optionally Repetitive accounting classes, are charged when accounting periods are closed.
As noted in the following table, different valuation and variance accounts are required under standard versus average costing.
| Account | Valuation | Variance |
|---|---|---|
| Material | Standard and Average | Standard and Average |
| Material Overhead | Standard and Average | Standard and Average |
| Resource | Standard and Average | Standard and *Average |
| Outside processing | Standard and Average | Standard and *Average |
| Overhead | Standard and Average | Standard and *Average |
| Standard Cost | Standard Only | Variance not applicable |
| Bridging | Average Only | Variance not applicable |
| Expense | Average Only | Variance not applicable |
WIP accounting class valuation accounts are defined as follows:
| Material | Normally an asset account this account tracks material costs. Under standard costing, it is debited at standard when you issue material to a job or schedule and credited at standard when you complete assemblies from a job or schedule, close a job, or close an accounting period. Under average costing, this account is debited at the average cost in effect at the time of the issue transaction and is credited when you complete assemblies from a job. |
| Material Overhead | Normally an asset account this account tracks material overhead (burden) costs. Under standard costing, it is charged/debited at standard when you issue material with material overhead to a job or schedule and relieved at standard when you complete assemblies from a job or schedule, close a job, or close an accounting period. Under average costing, this account is debited at the average cost in effect at the time of the issue transaction. Note: When a job is completed and material overhead is earned, this account is not charged /credited. Instead, the material overhead account for the completion subinventory is debited. |
| Resource | An asset account that account tracks resource costs. Under standard costing, it is charged/debited at standard when resources are charged to a job or schedule and relieved/credited at standard when you complete assemblies from a job or schedule, close a job, or close an accounting period. Under average costing, this account is debited and credited at the resource rate in effect at the time the resource is charged. |
| Outside Processing | An asset account that tracks outside processing costs. Under standard costing it is debited at the standard or purchase order cost when you receive items for a job or schedule in Oracle Purchasing. It is credited at standard when you complete assemblies from a job or schedule, close a job, or close an accounting period. Under average costing when you move job or repetitive schedule assemblies through an outside processing operation, it is debited at the resource's predefined rate or at the purchase order cost. See: Performing Move Transactions. |
| Overhead | Normally an asset account this account tracks resource or department overhead cost. Under standard costing it is debited at standard when resources are charged to a job or schedule. It is relieved at standard when you complete assemblies from a job or schedule, close a job, or close an accounting period. For additional information about how elemental accounts are charged under standard and average costing see: Manufacturing Average Cost Transactions in the Oracle Cost Management User's Guide, and Work in Process Standard Cost Transactions. |
WIP accounting class variance accounts are defined as follows:
| Material | This account tracks variances that occur when the previous level material costs charged to the job or schedule do not equal the previous level material costs that are relieved. This calculation gives you a net material usage and configuration variance. |
| Resource | This account tracks variances that occur when the this level resource costs charged to the job or schedule do not equal the this level resource costs that are relieved. If you charge actual labor without creating resource rate variances (resource standard rate is set to No), the resource variance includes any rate, efficiency, and method variances. If you recognize rate variances or charge resources at standard, the resource variance includes resource efficiency, and any method variances. |
| Outside Processing | Tracks the variances that are occur when the this level outside processing costs charged to the job or schedule do not equal the this level outside processing costs that are relieved. If you do not calculate purchase price variance (resource standard rate is set to No), the outside processing variance includes any rate, efficiency, and method variances. If you recognize purchase price variance, this account includes efficiency and any method variances. |
| Overhead | Tracks the variances that are occur when the this level overhead costs charged to the job or schedule do not equal the this level overhead costs relieved from the job or schedule. These variances include both efficiency and method variances. |
| Standard Cost | Applies only to standard discrete and non-standard asset. This account is charged for the sum of all the elemental standard cost adjustments when you perform a standard cost update that impacts an active job. Cost updates are not performed for repetitive schedules or expense non-standard jobs. |
| Bridging | This field is optional. |
| Expense | Optional, used to accommodate European accounting practices. |
| Estimated Scrap | Applies only to lot based jobs in Oracle Shop Floor Management enabled inventory organizations when Estimated Scrap Accounting is enabled. If this feature is enabled, both Estimated Scrap accounts are required. The scrap account field is required when defining a department on the Departments window. Additionally when you define this account, you can also track operation yield and estimated scrap absorption when creating transactions for lot based jobs. See Defining Parameters in the Oracle Shop Floor Management User's Guide. |