Overview of Work in Process Costing (Oracle Work in Process)


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Overview of Work in Process Costing

Oracle Work in Process provides a complete standard cost system to track and report your production costs.

WIP Accounting Classes

You can use WIP accounting classes to establish your valuation and variance accounts. You can enter separate accounts by cost element and by WIP accounting class for maximum account traceability. You can also enter the same account for more than one cost element. In either case, the system maintains elemental cost visibility. This is true under both standard and average costing.

Multiple Cost Elements

Through the multiple cost elements (material, material overhead, resource, outside processing, and overhead) that you assign to your accounting classes, the system can track all your production costs to the correct valuation and variance accounts.

Flexible Account Distributions

You can enter separate accounts by cost element and by WIP accounting class for maximum account traceability. However, if you enter the same account for more than one cost element, the system maintains elemental cost visibility. This is true under both standard and average costing.

Standard and Average Costs

You can use either standard or average costing. Discrete jobs, project jobs, and work order-less schedules can be costed using weighted average costs. You can only cost repetitive schedules using standard costs.

Job Costs

You can cost standard and non-standard asset discrete production by job. You can report job costs on a period-to-date and cumulative-to-date basis.

Project Costs

If you are using Oracle Project Manufacturing Costing, you can cost jobs by project. Project jobs can be specific to a single contract or a group of contracts for a specific customer.

Period Costs

You can cost and report your repetitive and non-standard expense production by period.

Activity Based Costs

You can charge and report resource, outside processing, and overhead costs by activity. You can then report and analyze the costs of various business activities, such as setup, teardown, inspection, and so on.

Repetitive Assembly and Line Costs

You can track your repetitive production costs by assembly on a line so you do not have to review your costs by individual repetitive schedule. You can also track repetitive costs by assembly across lines or by line so you can compare costs for your production lines.

Transaction Based Costs

You can track and report costs through the various stages of production. The system calculates all costs and reports move, issue, resource, overhead, completion, scrap, period close, and job close transaction costs.

Resource Charging

You can charge resources automatically or manually.

Overhead Charging

You can charge overhead automatically based on resource value charges, resource charges, or operation completions.

Fixed and Variable Resource, Outside Processing and Overhead Charging

You can set up resources, outside processing, and overheads with a basis of Lot for fixed charges per job or schedule, such as setup and teardown. You can use a basis of Item for resources, outside processing, and overheads that vary based on the job or repetitive schedule quantity.

Flexible Resource, Outside Processing, and Overhead Absorption

You can assign separate absorption accounts by sub-element, such as individual resources, outside processing resources, and overheads. As you charge resources, outside processing, and overheads, work in process valuation automatically absorbs your payroll, accounts payable accruals, and overhead cost pools. At period end, you can compare absorbed amounts with actual costs incurred in your general ledger cost pools and accounts.

Actual Labor Charging

You can charge resources at standard resource rates, standard employee rates, or actual rates.

Actual Purchase Price Charging

You can charge outside resources at predefined or actual purchase prices.

Period Close

When you close an accounting period, period close costs are calculated. The system costs and transfers all production costs by account to Oracle Financial products. You can transfer in summary and detail depending on your Oracle Inventory option.

Variances

You can track and report previous level usage variances for materials and this level efficiency variances for resources and overheads. The system calculates standard cost adjustment variances when the standard cost update is run.

Valuation Reporting

The system can provides complete valuation reporting including current balances, period to date charges, and cumulative to date charges. You can also report your work in process balances by cost element and level.