Generating Costs for Transaction Records
The Transaction Costing process picks up inventory transactions from the TRANSACTION_INV record and calculates the costs of each transaction, including, material, conversion, conversion overhead, landed, inbound, outbound, and other costs. The parameters for the Transaction Costing process are defined on the Cost Accounting Creation process page.
The Transaction Costing process:
Calculates the cost of receipts.
Calculates the cost of depletions. If chosen in setup, this could include costing negative inventory depletions before a corresponding receipt is available.
Calculates and updates the weighted average costs and actual costs of items having cost profiles that use actual, periodic average, or perpetual average cost methods.
Note: For standard cost items, the system does not automatically set frozen standard costs when you use the Transaction Costing process. To update standard costs, you must use the Cost Rollup process (CEPCROLL) and Update Production Costs process (CEREVAL, SFPREVAL, CES5001).
Calculates purchase price variances and exchange rate variances.
Calculates landed costs.
Calculates the cost of make items produced in PeopleSoft Manufacturing.
(optional) Launches the Negative Inventory Resolver process to check for new receipts (putaway and adjustment transactions) and adjust the quantities and costs of previously recorded negative inventory depletion transactions.
Working With Non Cost Items
Transactions involving a non-cost item (that is, items with a cost profile defined as non-cost) are not placed in the costing records by the Transaction Costing process. For example, putaway transactions are not moved to the CM_RECEIPTS record. Use caution if you later decide to change a non-cost item to an actual, standard, or average cost profile. After transactions have been generated in the system, changing a non-cost item can result in discrepancies between the costing and inventory records. A warning message displays online if you change the non-cost cost profile for an item with inventory transactions on the Define Business Unit Item - General: Costing page. If you decide to change a non-cost item please make sure you have no on hand quantity in the inventory business unit by running the Inventory Balance report (INS9090) and the Cost Management On hand Balance Validation report (CMS9010). Any inventory balance created while the business unit item used a non-cost profile will no longer be available when changing to another cost profile. In addition, PeopleSoft Cost Management does not support interunit pricing for non-cost items.
A negative inventory depletion transaction is a depletion transaction that drives the item quantity to a negative balance in the system even though physically the quantities did exist. The negative inventory feature is activated by selecting the Allow Negative Inventory check box on the Inventory Definition-Business Unit Options page.
Once PeopleSoft Inventory has shipped a negative inventory depletion transaction, you have options in PeopleSoft Cost Management on how to cost the transaction. There is no corresponding receipt or receipt cost to apply to the negative inventory depletion transaction. The Insufficient Qty Cost Option on the Cost Profiles page determines how the Transaction Costing process (within the Cost Accounting Creation process) applies costing to negative inventory transactions:
Field or Control |
Description |
|---|---|
Always cost insufficient qty |
Enables the Transaction Costing process (within the Cost Accounting Creation process) to cost negative inventory depletion transactions before sufficient quantity is entered into the business unit. For actual cost items, these costs can later be adjusted when sufficient quantity is placed in the Inventory business unit by putaway or adjustment transactions. For example, if there are 10 units of an item available in the business unit and an order is shipped and depleted for 15 units, then the entire depletion transaction of 15 units is costed the next time the Transaction Costing process is run, even if this is before sufficient stock is placed in the business unit. Of the 15 units, 10 are costed using the existing stock on hand and 5 are costed using the current average, current standard, or last actual cost depending on the cost method employed. |
Cost in Regular Mode Only |
Enables the Transaction Costing process (within the Cost Accounting Creation process), run in Regular mode only, to cost negative inventory depletion transactions before sufficient quantity is entered into the business unit. These costs can later be adjusted when sufficient quantity is placed in the Inventory business unit by putaway or adjustment transactions. If Transaction Costing is run in Mid Period mode, then the depletion transaction is costed up to the currently available quantity and the remainder is held. For example, if there are 10 units of an item available in the business unit and an order is shipped and depleted for 15 units and:
|
Cost to point of zero quantity |
Enables the Transaction Costing process (within the Cost Accounting Creation process) to split a negative inventory depletion transaction and cost part of the depletion transaction up to the currently available stock quantity. The remaining depletion transaction is held until sufficient stock is received. For example, if there are 10 units of an item available in the business unit and an order is shipped and depleted for 15 units, then the depletion transaction is split by the Transaction Costing process. 10 units are costed and 5 units are put on hold until sufficient stock is placed in the business unit. |
Don't cost if insufficient qty |
Enables the Transaction Costing process (within the Cost Accounting Creation process) to delay costing the entire negative inventory depletion transaction until sufficient stock is received to cover the depletion transaction. This is the default setting. For example, if there are 10 units of an item available in the business unit and an order is shipped and depleted for 15 units, then the entire depletion transaction of 15 units is put on hold by the Transaction Costing process until sufficient stock is placed in the business unit. |
The current cost used to cost negative inventory depletion transactions depends on the Deplete Cost Method on the item's Cost Profile. The options are:
Field or Control |
Description |
|---|---|
Actual Cost |
The last actual cost received for this item. |
Periodic Weighted Average |
Not applicable. This deplete cost method cannot be used to cost negative inventory depletion transactions before sufficient quantity is entered in the business unit. The transaction is held. |
Perpetual Weighted Average |
The current average |
Retroactive Perpetual Weighted Average |
The current average. |
Value at Current Standard |
The current standard cost for the item. |
If a current cost is not available for actual or average cost items, then the system uses the value entered in the Default Actual Cost field of the Define Business Unit Item - General: Common page.
The Accounting Line Creation process can process the costed depletion transactions and create accounting entries for the general ledger. This enables negative inventory depletion transactions to be reflected in the period end account balances rather then held up for receipt costs.
A negative inventory depletion transaction is costed by creating a dummy receipt row with a zero quantity. The depletion transaction is matched to this dummy receipt, which uses the new transaction group 001 (negative inventory) and is inserted into the costing tables. Once sufficient stock is received into the business unit, the negative state of the depletion can be cleared by using the Negative Inventory Resolver process.
Using the Negative Inventory Resolver
The Negative Inventory Resolver process has been added to the Transaction Costing process (within the Cost Accounting Creation process) to check for new putaway and adjustment transactions, and if sufficient quantities have been received into the business unit, the resolver process:
Applies the new receipt quantities to the previously recorded negative inventory depletion transactions. The resolver matches the negative inventory depletion transactions to actual stock received.
Creates adjusting accounting entries for items using the Deplete Cost Method of Actual Cost. The resolver creates an entry to reverse the cost previously recorded for the negative inventory depletion transaction and to record a new transaction at actual receipt cost. These changes flow to the Accounting Line Creation process where two accounting entries are created:
A reversing entry to remove the depletion based on the last actual cost received before the negative state.
An entry to record the depletion based on the actual receipt costs.
For items using the Deplete Cost Method of Value at Current Standard, Perpetual Weighted Average, or Retroactive Perpetual Weighted Average, the resolver does not change the previously recorded cost for the negative inventory depletion transaction. The standard or average cost on record at the time of the depletion was used on the original depletion and is not changed when the resolver corrects the negative state by matching the negative inventory depletion transactions to actual stock received.
Inserts resolved negative inventory depletion transactions into a history table called CM_RESOLVE_HIST.
To resolve negative inventory, select the Resolve Negative Inventory check box on the Cost Accounting Creation process page. The process is launched within the Transaction Costing process after receipts have been processed, but before depletions.
Note: The Negative Inventory Resolver process is optional. It is highly recommended that you use this process to resolve all negative depletion transactions so that reports and queries do not reflect negative states that have been resolved. The resolver does not impact the total on hand quantity. For costs, it only impacts the total inventory value for actual cost items.
Inquiries for Negative Inventory
Two inquiries are available to monitor the costing of negative inventory depletion transactions and the recalculations of the quantities and costs performed by the Negative Inventory Resolver process. These queries are CM_PENDING_RESOLVER and CM_RESOLVED_NEG_HIST and can be viewed using the Query Viewer.
The CM_PENDING_RESOLVER query returns negative inventory depletion transactions that have not been resolved.
The CM_RESOLVED_NEG_HIST query returns negative inventory depletion transactions that have been resolved and recorded in a history table CM_RESOLVE_HIST.
For makeable items using actual or average cost profiles, the Transaction Costing process (within the Cost Accounting Creation process) processes according to the production ID. After the production ID has been closed for accounting, the Transaction Costing process finishes debiting the unposted transactions and calculates the actual cost of the assembly items. Then, the process clears WIP to finished goods for all cost books. Finished goods receives the completed items. They are posted to the TRANSACTION_INV record or directed to another production ID. The Transaction Costing process gathers the actual costs that have been recorded and posts the costs to the CE_ACTUAL_COST table. Then, the Transaction Costing process posts the manufacturing costs from the CE_ACTUAL_COST table to the CM_ACTUAL_COST table.
If the production ID is not costed by the Transaction Costing process, the transaction displays on the Pending Transactions page under the Pending Calculation Prdn Cost. If an item is not costed, simply enter the necessary corrections to the production data and the item will be costed on the next run of the process. There are a number or reasons that the Transaction Costing process may not pick up a production ID that has been closed for accounting, including:
The Transaction Costing process was not run for the business unit and cost book with the Calculate Actual Prdn Costs check box selected.
For direct labor costs, no actual labor rates are set up for the business unit when the make item's Cost Profile has a labor cost method of Actual Time-Crew Rate.
For direct labor costs, no conversion rates exist for the business unit when the make item's Cost Profile has a labor cost method of Actual Time-Conversion Rate.
For direct labor costs, either no routing times or no conversion rates are defined for the business unit when the make item's Cost Profile has a labor cost method of Standard Time-Conversion Rate.
For direct labor costs, no default cost version is active for the business unit when the make item's Cost Profile has a labor cost method of Standard Time-Conversion Rate.
For direct machine costs, no conversion rates exist for the business unit when the make item's Cost Profile has a machine cost method of Actual Time-Conversion Rate.
For direct machine costs, either no routing times or no conversion rates are defined for the business unit when the make item's Cost Profile has a machine cost method of Standard Time-Conversion Rate.
For direct machine costs, no default cost version is active for the business unit when the make item's Cost Profile has a labor cost method of Standard Time-Conversion Rate.
For overhead costs, no production overhead codes were defined.
For overhead costs or direct materials, no default cost version is active for the business unit.
For direct materials, the production ID has rows stuck in CM_DEPLETION or CM_DEPLETE.
For direct materials, insufficient quantity exists to satisfy the depletion.
For direct materials, an adjustment has been posted since the last time the Transaction Costing process has been run and the process must be run again for this production ID.
The production ID has uncosted rows in CE_ACTUAL_COST, due to:
A lower level production ID with unfinished costing. The lower level production ID has the Hold for Final Cost check box selected the cost profile and the Transaction Costing process was run in mid-period mode.
A current level open production ID that has the Hold for Final Cost check box selected the cost profile and the Transaction Costing process was run in mid-period mode.
The production ID has rows stuck in CM_DEPLETION or CM_DEPLETE.
The production ID is not defined for actual or average costing.
The Transaction Costing process (within the Cost Accounting Creation process) also records the cost for components or kits returned to inventory. When components are returned to inventory stock, the transaction groups, 220 (Component Kit) and 230 (Component Consumption), are inserted in the TRANSACTION_INV table with a negative quantity. The Transaction Costing process must find the correct cost and process the receipt to the CM_RECEIPTS record.
In a standard costed environment, the returned stock is received and put away at the standard cost.
For items using a deplete cost method of actual or periodic weighted average, the original receipt cost must be located by back tracking from the depletion record (for the production ID that consumed the component) to the original receipt. The process uses the last component consumed for the unit, item, production ID, and operation sequence. If the item is lot or serial-controlled, then the specific lot or serial must be found on the depletion record. FIFO and LIFO items also use the last consumed on the depletion record. For items using a deplete cost method of perpetual weighted average, the return transactions is costed using the weighted average of the items issued. For more information, see the "Returning Perpetual Weighted Average Items to Inventory" section of this topic.