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Identifying Costs Associated with Items

Identifying Costs Associated with Items

Concept

To track inventory costs, you must provide cost information for items. Cost information determines:

• Whether the system maintains one overall cost for the item or a different cost based on the branch/plant.

• The cost method that the system uses to track inventory costs.

• The cost method that the system uses for purchase orders.

 

You determine whether the system maintains one overall cost for an item or a different item cost for each branch/plant. You can also define a different cost for each location and lot within a branch/plant. The level at which you assign a cost to an item determines whether the system maintains costs at the lot, location, branch/plant, or master level. The cost level also determines how you locate the item to assign cost methods and enter item costs. You can assign costs to items at these levels:

1. Same cost for all branch/plants

2. Cost by branch/plant

3. Cost for each location/lot in a branch/plant

 

You determine whether the system maintains one overall cost for an item or a different item cost for each branch/plant.

 

Enter cost methods for items when you enter either item master information or item branch information. You must specify the cost method that the system uses to determine an item’s cost for:

• Sales and costs of goods sold

• Purchase orders

 

The system provides eight predefined cost methods. You can define your own cost methods with user-defined codes (UDC). Oracle reserves cost methods 01 through 19.

 

For each cost method that you assign to an item, you must specify a cost. For example, to use the last-in cost method for an item, you must enter an initial cost for that cost method. The system updates the last-in cost based on the cost of the item as of the last receipt date.

 

If you do not enter an item cost for the cost methods that you assign to sales, inventory, or purchasing, the system displays a warning message. If you ignore the warning, the system assigns a zero cost for the cost method.

 

The system stores inventory cost records in the Item Cost File table (F4105).

Procedure

In this task, you will review the cost information for an item and add a new cost method and unit cost.

Step Action
Navigate to the Item Master program (P4101) on the Inventory Master/Transactions menu (G4111).

Click the Inventory Master/Transactions link.

Click the Item Master link.

Use the Work With Item Master Browse form to search for and select item records.

Step Action
Click in the Item Number field.

Enter the desired information into the Item Number field. Enter “210“.
Click the Find button.

Click the 210 option.

Click the Select button.

Use the Item Master Revisions form to review and update item information.
Use the Inventory Cost Level field to specify the level at which the system maintains costs for the item.

Step Action
Click the Cancel button.

Step Action
Click the Row button.

Step Action
Click the Cost Revisions menu.

Use the Work With Item Cost form to review existing costs for an item.
Notice that the Branch/Plant column is populated. This is because the Inventory Cost Level field on the Item Master Revisions form is set to 2 (Item/Branch Only).
Click the 210 option.

Click the Select button.

Use the Cost Revisions form to set up the costing methods and unit costs for an item.
Use the Sales/Inventory field to specify the default method of costing that the system uses for inventory and sales transactions.
Use the Purchasing field to specify the default method of costing that the system uses to determine the cost on purchase orders.
You must define a value in the Unit Cost field for the cost method value that you specify in the Sales/Inventory and Purchasing fields.

In this example, the system uses Cost Method 07 for both Sales/Inventory and Purchasing transactions.

Step Action
Click in the Cost Method field.

In this example, add a future cost for the item.

Enter the desired information into the Cost Method field. Enter “05“.

Click in the Unit Cost field.

Enter the desired information into the Unit Cost field. Enter “540“.
Click the OK button.

Step Action
Click the Close button.

Step Action
Click the Close button.

You have successfully reviewed the cost information and added a new cost method and unit cost for an item.

End of Procedure.

Ayman Refat
Over 20 years of experience in IT area, working as Oracle JD Edwards Developer with expertise in Windows Server, SQL Server and Microsoft Exchange Server, experience in Linux operating systems (Debian and Redhat), VMWare ESX / ESXi, Novell Netware, relational databases like Oracle 10/11g and backup solutions from Computer Associates. Large experience in high-end servers from Dell and HP, having the following certifications: Microsoft: MCP, MCSE, MCDBA, MCSA and MCT (2008 ~ 2013), Computer Associates: Technical Specialist – Storage and Backup Solutions,
http://www.AymanRefat.com

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