JD Edwards EnterpriseOne Advanced Cost Accounting Overview

The JD Edwards EnterpriseOne Advanced Cost Accounting system from Oracle provides a foundation for managerial accounting and activity-based costing. The JD Edwards EnterpriseOne Advanced Cost Accounting foundation includes fully integrated building blocks that are designed around business processes.

JD Edwards EnterpriseOne Advanced Cost Accounting enables you to analyze data using traditional cost accounting, activity-based costing, or a combination of the two. You can combine traditional cost accounting and activity-based costing for greater flexibility in managing a business.

Traditional accounting and activity-based costing differ in that activity-based costing is not required to follow Generally Accepted Accounting Principals (GAAP). In activity-based costing, debits do not have to equal credits. You can focus on a segment of the business instead of the entire business.

Typically, you use activity-based costing when a more accurate allocation of indirect expense-to-cost object is required.

In general, cost objects are divided into two major categories: customer and product. You can determine the level of detail for customer and product based on the needs of the business.

Managerial accounting provides the information that managers of economic organizations use to plan and control their operations. It analyzes an organization at the profit center level rather than at the organizational level used in financial accounting. For example, managerial accounting analyzes customer and product information rather than organizational levels such as marketing, administration, and manufacturing.

In managerial accounting systems, traditional financial accounting systems provide databases that are used in modeling, simulation, and "what-if" analyses. Allocations are run over indirect cost pools to assign all revenues and expenses to the profit center level. This process provides the information that is necessary to make high-level decisions about product lines, customer profitability, marketing strategies, reorganizations, and cost reduction projects.

JD Edwards EnterpriseOne Advanced Cost Accounting addresses the reporting needs for managerial decision-making. For example, by producing unique views of financial information, JD Edwards EnterpriseOne Advanced Cost Accounting demonstrates that the same sales volume can have vastly different profit margins because of shipment size, special packaging, special requirements, and product mix.

To address these needs, JD Edwards EnterpriseOne Advanced Cost Accounting enables you to:

• Capture financial information within the cost analyzer table for further analysis.

• Track and assign transactions using cost objects.

• Capture quantity information.

• Reassign costs based on cost drivers.

Activity-based costing enables you to identify and capture direct or indirect costs for specific products or customers by using cause-and-effect relationships. JD Edwards EnterpriseOne Advanced Cost Accounting enables you to collect, track, and assign activities to specific cost objects.

This table lists features of JD Edwards EnterpriseOne Advanced Cost Accounting:

Feature	Usage
Cost object tracking	Enables you to directly assign transactions to their original cost objects. Cost objects are the lowest level at which costs are calculated or tracked. Examples of cost objects include customers, item numbers, and sales numbers.
Cost analyzer	Enables you to arrange and analyze managerial accounting information without affecting financial accounting information.
Detailed product costs	Enables you to capture detailed product costs when you create automatic journal entries. Use detailed product costs to analyze costs for material, labor, or overhead.
Driver calculations	Enables you to calculate volumes that are based on transaction information. For example, you can calculate the number of sales order lines by customer. Driver volumes are used to reassign indirect costs to cost objects.
Cost assignments and allocations	Enables you to process calculations for activity-based costing, as well as managerial accounting, over the Cost Analyzer Balances table (F1602). You can define allocations according to your business needs. The system provides an audit trail of the calculations and provides separate balances for amounts that are transferred from and to original balances.
Activity-based costing	Enables you to define cost objects, activities, and processes, and to create relationships between them. It also enables you to analyze business process costs.