LCM Landed Cost Not Absorbed In The Related Period after running PAC adjustment processor (Doc ID 1915900.1)

Last updated on SEPTEMBER 26, 2016

Applies to:

Oracle Cost Management - Version 12.1.3 and later
Information in this document applies to any platform.

Goal

We are using ODM (not OPM enabled) Organization for our spare parts

Cost Method = Periodic Average

We received 52 units from PO 1981, Receipt Num 211, Line 1: 50 PCs and Line 2: 2 PCs – Total cost: 218,620.75

Landed cost was booked and matched in May-14 for the amount of 15,421.91 but was absorbed to item cost and absorption accounting generated in Jun-14

Since we are on PAC, such LCM shall be absorbed and included in May cost as per the sheet “Cost Calculation” of the attachment.

The current system treatment applies only if LCM was booked and matched in period Jun-14. In that case, the system shall check the opening quantity (OQ) of Jun-14. If OQ is bigger than receipt quantity, then full LCM shall be absorbed to item cost (as done in the current system treatment). If OQ is less than receipt quantity, then LCM amount shall be allocated proportionally between inventory and Landed cost variance account

Example: in the attached, assume Jun opening quantity was 20 PCs only, the 15,421.91 shall be distributed as following:

15,421.91 X 20 / 52 = 5,931.50 goes to inventory and item cost for June will be 4,462.502976
15,421.91 X 32 / 52 = 9,490.41 goes to landed cost variance account

Accounting would be as following (sorry for using OPM terms but they are clearer than ODM)

EVENT_CLASS_CODE EVENT_TYPE_CODE ACCOUNTING_CLASS_CODE Debit Credit
LC_ADJUSTMENTS LC_ADJUST_VALUATION INVENTORY_VALUATION 5,931.50
LC_ADJUSTMENTS LC_ADJUST_VALUATION LANDED_COST_VARIANCE 9,490.41
LC_ADJUSTMENTS LC_ADJUST_VALUATION LANDED_COST_ABSORPTION 15,421.91

How to handle the accounting without having any variances generated?
 

Solution

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