Cost Object Tracking
Cost object tracking is the most critical part of JD Edwards EnterpriseOne Advanced Cost Accounting (ACA). If costs are not monitored in detail, information is not available for managerial accounting and activity-based costing. Every transaction that is applicable to a specific customer, product, item number, or other criteria must have the appropriate cost object value.
To facilitate cost object tracking, the cost management constant for activating cost objects must be turned on. This setting opens additional fields for the five different cost objects that are available in ACA and enables transactions to be entered with cost objects attached. Cost object edits are also important to cost object tracking. If cost object edits are not set up properly, the resulting output might be unpredictable.
For example, ABC Company wants to know the profitability of individual product lines. Using ACA, the company can set up a cost object for product lines, and track costs and revenues that are associated with each specific product. It can also allocate indirect costs that are based on a business driver, such as warehouse square footage. Profitability by product can be obtained because all of the costs and revenues have been accounted for at the product level.
You can capture cost object information when you enter transactions in multiple systems, such as purchase orders, receipts, invoices, and so on. When you create journal entries, you can update, verify, and post cost object information. These transactions can be used in managerial accounting or activity-based costing through the Cost Analyzer table. This step is, perhaps, the most important step in the cost management cycle because the system updates the records with cost object information in the other systems with which it interfaces, such as the JD Edwards EnterpriseOne Accounts Receivable and JD Edwards EnterpriseOne Inventory Management systems.