PPV From OSP Deliveries Hit Resource Variance Account Instead of Organization PPV Account (Doc ID 551214.1)

Last updated on MARCH 13, 2023

Applies to:

Symptoms

Accounting distributions created for purchase price variance of OSP items are created for the
Variance Account from the OSP resource, not from the Organizational PPV Account. Example:

TXN_ID REF_ACCT  WIP_ENTITY     ACCTING_LINE_TYPE               BTV

8006         1064                   7002             4 Resource Absorption                   -795
8006         1068                   7002              Valuation                               530
8006         1165                   7002             or Rate Variance                   265

The REF_ACCT for the 3rd distribution line, PPV or Rate Variance, should be 1061 (acct 5221)
instead of 1165 (acct 5025).

Per Oracle_ Cost Management User’s Guide, Release 11i, Part No. A75088–04, March 2004, Page 4
– 59, the Purchase Price Variance Account is to be Debited/Credited for the difference between
the standard rate and the purchase order price (if the OSP Standard Rates option is enabled).

STEPS TO REPRODUCE
1) Set up OSP Resource with OSP Item. Enable Standard Rates and a Frozen Standard. Ensure the
Variance Account is not the same as the Organization PPV account.
2) Create Lot-Based job using the OSP Resource.
3) Move job to routing step that will drop OSP requisition.
4) Create PO from OSP requisition. Ensure PO price is different from the Resource standard.
5) Receive the entire PO line.
6) Observe that the account hit for the purchase price variance is the Resource Variance Account,
not the Organization PPV account.

SETUPS:
- OSP Resource = 1834ASFS1
- OSP Item = ASM1834ASF-T-S1
- Costed with Standard Rate checked on
- Resource Variance natural account = 5025 (account_id = 1165).
- Organization PPV account = (5221) (account_id = 1061).
- Frozen Standard = .002

Lot Based Job Requirements:
- Job OACS06-1, Qty = 265,000
- Resource 1834ASFS1: Requirements = 265,000

PO Price
- PO OACS080107A, Line 1
- Item ASM1834ASF-T-S1, Qty = 265,000, Price = .003 (.001 higher than Standard of .002)

PO Receipt Delivery
- Full quantity of 265,000 delivered to Job OACS06-1
.
WIP Account Distribution
- WIP Account Distributions reveals that the Resource Variance account (5025) was hit for $265
(265,000 x .001) rather than Org PPV account (5221).


EXPECTATION
It is expected that the Org PPV account will be hit by differences between Resource Standard and
PO Price. It is expected that the Resource Account will be used for tracking quantity or usage
differences (i.e. efficiency variances)

Changes

Cause

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