Basis Types

Basis Types

(a)    Basis types determine how costs are assigned to the item.

(b)   Basis types are assigned to subelements, which are then assigned to the item.

(c)    Each subelement must have a basis type. Examples: one hour of outside processing per basis item, two quarts of material per basis lot.

(d)   Basis types are assigned to subelements in three windows and, for the overhead subelement, a setting established in one window may not always be applicable in another. (This refers specifically to the overhead subelement, not the material overhead subelement.)

Basis types in Subelement and Routing Windows

(a)    Basis types assigned to subelements in subelement and routing windows are the defaults for the purpose of routing.

(b)   Basis types Resource Units and Resource Value, when assigned to an overhead subelement(Routing only in the table below), are available to flow through to routing, but are not available in the Item Cost window.

Basis types in the Item Cost window

(a)    When you are defining item costs, for any overhead subelement with a previously assigned basis of Resource Units or Resource Value, that basis is ignored, and only item or lot appears in the basis pop-up window.

(b)   This does not change the assigned basis for the purpose of routing.

Basis Types Available to Subelements

Basis Type	Material	Material Overhead	Resource	Outside Processing	Overhead
Activity	N/A	Yes	N/A	N/A	N/A
Item	Yes	Yes	Yes	Yes	Yes
Lot	Yes	Yes	Yes	Yes	Yes
Resource Units	N/A	Yes	N/A	N/A	Routing Only
Resource Value	N/A	Yes	N/A	N/A	Routing Only
Total Value	N/A	Yes	N/A	N/A	N/A

Item

(a)    Used with material and material overhead subelements to assign a fixed amount per item, generally for purchased components.

(b)   Used with resource, outside processing and overhead subelements to charge a fixed amount per item moved through an operation.

Lot

(a)    Used to assign a fixed lot charge to items or operations.

(b)   The cost per item is calculated by dividing the fixed cost by the item's standard lot size for material and material overhead subelements.

(c)    For routing steps, the cost per item is calculated by dividing the fixed cost by the standard lot quantity moved through the operation associated with a resource, outside processing, or overhead subelement.

Resource Value

(a)    Used to apply overhead to an item, based on the resource value earned in the routing operation.

(b)   Used with the overhead subelement only and usually expressed as a rate. The overhead calculation is based on resource value:

Resource value earned in the operation x overhead rate

Resource Units

(a)    Used to allocate overhead to an item, based on the number of resource units earned in the routing operation.

(b)   Used with the overhead subelement only. The overhead calculation is based on resource units:

Resource Units Earned In An Operation X Overhead Rate Or Amount

Note: You may optionally use resource units and resource value to earn material overhead when you complete units from a job or repetitive schedule.

Total Value

(a)    Used to assign material overhead to an item, based on the total value of the item. Used with the material overhead subelement only. Material overhead calculation is based on total value:

Activity

(b)   Used to directly assign the activity cost to an item. Used with the material overhead subelement only. The material overhead calculation is based on activity:

Activity occurances / # of items X activity rate

Cost Sub Elements

Cost Subelements

You can use subelements as smaller classifications of the cost elements. Each cost element must be associated with one or more subelements. Define subelements for each cost element and assign a rate or amount to each one. You can define as many subelements as needed.

Material Subelements –

(a)    Classify your material costs, such as plastic, steel, or aluminum.

(b)   Define material subelements and assign them to item costs. Determine the basis type (allocation charge method) for the cost and assign an appropriate amount.  

Material Overhead Subelements -

(a)    Define material overhead subelements and assign them to item costs.

(b)   Determine the basis type for the cost and define an appropriate rate or amount, such as purchasing, freight, duty, or material handling.  

Resource Subelements –

(a)    Define resource subelements.

(b)   Determine the basis type for the cost and define an appropriate rate or amount.

(c)    Each resource you define is a subelement, can be set up to charge actual or standard costs, and may generate a rate variance when charged.  

Overhead Subelements –

(a)    Define overhead subelements and assign them to your item costs.

(b)   Determine the basis type for the cost and define an appropriate rate or amount.

(c)    Overhead subelements are applied in the routing and usually represent production overhead.

(d)   You can define overheads based on the number of units or lot moved through the operation, or based on the number of resource units or value charged in the operation.  

Outside Processing Subelements –

(a)    Define outside processing subelements.

(b)   Determine the basis type for the cost and define an appropriate rate or amount.

(c)    This subelement is associated with the outside processing cost element and represents service provided by suppliers.

(d)   Each outside processing resource you define is a subelement, may be set up to charge actual or standard costs, and may generate a purchase price variance when charged.  

Cost Elements

Cost Elements

Product costs are the sum of their elemental costs. Cost elements are defined as follows:

(a)    Material

(b)   Material Overhead

(c)    Resource

(d)   Overhead

(e)    Outside Processing

Material - The raw material/component cost at the lowest level of the bill of material determined from the unit cost of the component item.

Material Overhead –

(a)    The overhead cost of material, calculated as a percentage of the total cost, or as a fixed charge per item, lot, or activity.

(b)   You can use material overhead for any costs attributed to direct material costs.

(c)    If you use Work in Process, then you can also apply material overhead at the assembly level using a variety of allocation charge methods.

Resource –

(a)    Direct costs, such as people (labor), machines, space, or miscellaneous charges, required to manufacture products.

(b)   Resources can be calculated as the standard resource rate times the standard units on the routing, per operation, or as a fixed charge per item or lot passing through an operation.

Overhead –

(a)    The overhead cost of resource and outside processing, calculated as a percentage of the resource or outside processing cost, as a fixed amount per resource unit, or as a fixed charge per item or lot passing through an operation.

(b)   Overhead is used as a means to allocate department costs or activities. For example, you can define multiple overhead subelements to cover both fixed and variable overhead, each with its own rate.

(c)    You can assign multiple overhead subelements to a single department, and vice versa.

Outside Processing –

(a)    This is the cost of outside processing purchased from a supplier.

(b)   Outside processing may be a fixed charge per item or lot processed, a fixed amount per outside processing resource unit, or the standard resource rate times the standard units on the routing operation.

(c)    To implement outside processing costs, you must define a routing operation, and use an outside processing resource.

WIP Class Types

WIP Class Types

1. Standard Discrete
2. Repetitive Assembly
3. Asset Non-standard
4. Expense Non-standard
5. Standard Lot Based
6. Maintenance
7. Expense Non-standard Lot Based

Standard Discrete

(a)    Standard discrete accounting classes can be used to group job costs. For example, if you build subassemblies and finished goods, you can define your accounting classes so that you can separately value and report the costs associated with subassembly and finished goods production.

(b)   Standard discrete accounting classes can be automatically defaulted when you create discrete jobs.

(c)    When you define an accounting class, you must assign valuation and variance accounts to it.

(d)   When you issue materials to a job that uses this accounting class, the appropriate valuation accounts are charged.

(e)    When the job is closed, final costs and variances are calculated and posted to the variance and valuation accounts.

(f)    When the accounting period is closed, these journal entries are automatically posted to the general ledger.

Non-Standard Discrete

(a)    Non-standard discrete accounting classes can be used to group and report various types of non-standard production costs, such as field service repair or engineering projects.

(b)   For example to track recurring expenses - machine maintenance or engineering projects - with non-standard jobs, you can define and assign an accounting class with a type of expense non-standard to these jobs.

(c)    The valuation accounts carry the costs incurred on these expense jobs as an asset during the period and automatically writes them off to the variance accounts at period close.

(d)   On the other hand, if you use non-standard discrete jobs to track production costs as assets, you can define and assign an accounting class with a type of asset non-standard.

(e)    Asset non-standard discrete jobs are costed the same as standard discrete jobs.

(f)    Valuation accounts are charged when material is issued to a job and final costs and variances are calculated and posted to the appropriate variance and valuation accounts when the job is closed.

Repetitive

(a)    Repetitive accounting classes are used to group production costs and must be assigned to each repetitive line/assembly association that is created.

(b)   Every schedule for that assembly on that line uses these accounts.

(c)    The accounts are charged whenever you transact against the line/assembly association.

(d)   Repetitive accounting classes can be automatically defaulted when you associate repetitive assemblies with production lines.

(e)    You can analyze repetitive manufacturing costs by assembly regardless of the line on which it was manufactured by using the same accounting class for all lines that build that assembly.

(f)    You can use the same class for all assemblies on a line to do line based cost reporting or you can use a different accounting class for every line/assembly association.

Standard Lot Based

(a)    Standard jobs control the material, resources, and operations required to build an assembly and collect costs.

(b)   When you build lot based jobs, the standard lot based accounting class is used to separately value and report costs associated with yielded production at each individual operation on the routing.

(c)    You must assign valuation and variance accounts to it.

(d)   When you issue materials to a job that uses this accounting class, the appropriate valuation accounts are charged.

(e)    When the job is closed, final costs and variances are calculated and posted to the variance and valuation accounts.

(f)    When the accounting period is closed, these journal entries are automatically posted to the general ledger. If Estimated Scrap Accounting is enabled, both Estimated Scrap accounts are required. If this feature is not enabled, the Estimated Scrap account fields are disabled.

Expense Non-standard Lot Based

(a)    Non-standard jobs control material and collects costs for miscellaneous activity.

(b)   These jobs are used for expense work orders for testing, prototypes, and rework where operation yield costing is not considered.

(c)    You can perform all transactions (moves, jumps, scrap, splits, and update assemblies or routings) with the exception of job merge.

Maintenance

(a)    Maintenance accounting classes are used to group costs for work orders used in Oracle Enterprise Asset Management (eAM).

(b)   For example, if you are creating work orders for plant maintenance activities, you can define your accounting classes to separately value and report the costs related to asset.

(c)    Maintenance accounting classes are automatically defaulted when you create eAM work orders.

(d)   When you define an accounting class, you must assign valuation and variance accounts to it.

(e)    When you issue materials to a work order that uses this accounting class, the appropriate valuation accounts are charged.

(f)    When the work order is closed, final costs and variances are calculated and posted to the variance and valuation accounts.

(g)   When the accounting period is closed, these journal entries are automatically posted to the general ledger.