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Periodic Absorption Costing Troubleshooting (Doc ID 456218.1)

Last updated on MARCH 12, 2021

Applies to:

Oracle Cost Management - Version 11.5.10.2 and later
Oracle Supply Chain Globalization - Version 11.5.10.2 and later
Information in this document applies to any platform.
Cost Management-> Periodic Costing -> Reports -> Periodic Absorption Cost Processor


Periodic Absorption Cost Process
Phases 1–4 and Phase 7: Absorption Cost Process
Phase 5: Periodic Cost Processor
Phase 6: Periodic Distribution Processor

Periodic Absorption Cost Processor
Phase 1-4 (all cost groups)
Phase 7: Absorption Cost Process (all cost groups)
Phase 5: Periodic Cost Processor
Phase 6: Periodic Distribution Processor

Phase 1-4 (all cost groups)
Phase 1: Periodic Acquisition Cost Process
Phase 2: Copy Prior Period Balance
Phase 3: BOM Explosion
Phase 4: WIP Processor

Phase 7: Absorption Cost Process (all cost groups)
Process Cost owned transactions (Group 1 transactions)
Absorption Cost Rollup Process
Process WIP cost owned transaction (Group 1’ transactions)
Iteration Process for Inter org Transactions
Process Cost derived transactions (Group 2 and Group 2’ transactions)

Phase 5: Periodic Cost Processor
LIFO Extension
Close WIP Job Process
Phase 6: Periodic Distribution Processor
Phases 1-4 and Phase 7 are executed for all cost groups in a legal entity in a single run.
Phase 5 and Phase 6 are executed for each cost group in a different run


Purpose

The appropriate valuation and analysis of manufacturing costs have been for years a key factor in a successful business management. One of these approaches, Absorption Costing, allocates all possible variable costs to the output units. Since indirect costs are usually known periodically, companies following the absorption cost approach usually valuate inventory on a periodic cost basis.


In this context of periodic costing, the right sequence in which the cost of the items rollup of the raw materials cost into subassemblies and then from the subassemblies into the assembly item cost could be very complex, especially in the case of scenarios where the same item is in different levels of different bills of materials and also when transfers between different manufacturing plants occur from these items.


A new algorithm, presented in this document, has been developed to identify the right sequence in which items should be costed in order to comply with the absorption-costing objective.

Troubleshooting Steps

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In this Document
Purpose
Troubleshooting Steps
 Periodic Absorption Cost Calculations Questions
 Viewing and verifying the results

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