Cost Management for Internal Material Transfers

Cost Management supports receipt accounting and cost accounting for requisition based internal transfers for items going to either an expense or an inventory destination, with or without a receipt at the destination.

Oracle Self-Service Procurement, Oracle Supply Chain Financial Orchestration, and Oracle Cost Accounting have been integrated to provide an estimated transfer price based on the internal cost of the items on the requisition. A transfer price is required on the internal material transfer requisition line for approval, budgetary control, and encumbrance accounting.

Cost Management supports requisition-sourced transfer orders going to expense destinations with multiple distributions and different expense accounts. Based on the account defined at the distribution level, Cost Management will book the expense for the appropriate account. In the case of transfers to expense destinations where a receipt is not required, new logical receipt and delivery transactions are created in Cost Management, similar to the physical events created with receipt expense destination transfers when a receipt is required. Budgetary control and encumbrance accounting are supported for expense destination internal transfer orders.

Lot and Serial Level Costing for Transfers

When using the actual or average cost methods, lot and serial level costing helps you to accurately retain and track cost information across transfers ensuring a complete picture of the production costs. You can track this cost information for cost-based transfers, when goods are transferred from one organization to another or within an organization when transfer flow isn't orchestrated by Supply Chain Financial Orchestration. Knowing the cost throughout the supply chain allows for better decision making with reference to cost visibility, tracking, and pricing.

You can track the costs for transfers using the cost method and valuation unit combinations listed here:

Perpetual average cost method with granular valuation structure having valuation unit at the Serial or Lot level.
Actual cost method with any valuation unit where summarization at the Lot or Serial level isn't enabled.

This cost tracking is supported by the business flows listed here:

Inventory destination cost-based transfers from one inventory organization to another inventory organization.
Expense destination cost-based transfers from inventory organization to an expense location.

Note: Do note these points regarding cost tracking during transfers:

Items with different inventory control in source and destination organizations are average costed. For example, the item is lot or serial controlled in the shipping organization and no control in the destination organization or vice versa.
Expense destination transfers without receipt having multiple distributions are average costed.
Transfer order receipt transactions to expense destination are average costed because the receipt doesn't have visibility of lot or serial data. The actual cost is used when booking expense on receipt delivery event.