CTO Cost Rollup PDF

Cost Rollup Process For Configured Items
(CTO)
Devaraju Holenarasipur
Rajkumar Chockalingam
Copyright © 2015 Oracle and/or its affiliates. All rights reserved. | 1

Objectives
 How cost rollup works in case of Configured Items (CTO)

 Key setups / Processes Involved

Agenda
1 Introduction
2 Cost Rollup Process For CTO
3 Basic setups and Process Flow
4 Scenarios
5 Troubleshooting CTO Cost Rollup Issues
6 Question And Answer

Introduction
What is Configure to Order
 Environment in which product or service is assembled or kitted on receipt of
Sales Order
Includes ATO, PTO and Hybrids
 ATO Configuration item is created from selected options using configurator
 ATO Item can be used to Create Pre-Configurations
In case of PTO, Pick slip used to kit included items and selected options.

Introduction
CTO Cost Rollup
 Calculates the cost of an Assembly Item (Configured item) as per the required
components, subassemblies, resources, and overheads.
 Configuration item cost rollup is a single level cost rollup.
 Optional Process that occurs during the Auto create configuration Process
 Also can be run manually for all sales orders and preconfigured items using the
CTO Calculate Cost Rollup concurrent program.

Introduction
CTO Cost Rollup
 If the organization is using standard costing, CTO will update the frozen cost of the
configuration with the cost rolled up in the CTO cost type.
 If the costing organization is an average, LIFO, or FIFO organization, the valuation cost
of the item is not updated and the cost in CTO cost type serves as an estimated cost.
 If a configuration item is purchased, an entry will be created in CTO Buy Cost type,
based on the list price of the configuration in the PO Validation Organization
 CTO cost rollup will internally call Supply chain cost rollup.

Introduction
CTO Cost Rollup
 In the case of Multilevel configuration items, CTO performs the cost rollup for all
configuration items in the BOM, starting with the lowest level configuration item.
Cost of the parent configuration uses the cost of the child configuration from the
CTO cost type.
 For procured configurations, the cost specified in the profile BOM: CTO Buy cost
type is used as the Buy Cost, and is included in the rollup of the parent configuration

Make Configuration – Cost Rollup Process
 For Make configurations, the cost is rolled up by adding up the valuation costs of
all the components / subassemblies in the configuration BOM for which Include in
cost rollup flag is set to Yes.
 The cost is first rolled up in seeded, non updatable CTO cost type, then the value
in CTO cost type is copied to frozen
 This is the total Rolled up Cost for the configuration. The cost is calculated in the
manufacturing organization.

Buy Configuration – Cost Rollup Process
 If a configuration item is purchased, an entry will be created in the cost type
specified in the profile BOM: CTO Buy Cost type, based on the list price of the
configuration in the PO Validation Organization.
 This cost is the total Rolled up Cost for the configuration.
 The cost in the buy cost type will be used in the rollup only if the configuration has
a buy type sourcing rule in the assignment set.
 If a configuration is procured, but does not have buy type sourcing rules, it will be
treated as a manufactured item for the purposes of cost rollup

Setups and Processes
 Define Costs
– Define items, BOM, routings
– Setup valuation costs for Components and Subassemblies.
 Define buy cost type
 Setup MRP sourcing rules
– Define sourcing rules
– Assign sourcing rules to Assignment Set
 Set up Profile Options
 Run CTO Cost Rollup Program

Setups and Processes
Profile Options
 BOM: CTO Perform Cost Rollup
 BOM: CTO Buy Cost type
 BOM: Match to Existing Configurations
 MRP: Default Assignment Set
 BOM: Send Notifications for Autocreate Config Exceptions
 BOM: CTO Perform List Price and Purchase Price Rollup

Scenarios
Case 1: Make Configurations
Case 2: Pre-Configurations
Case 3: Buy Configurations

Scenarios
Case 1: Make Configurations

Make Configurations
Model Bill

Make Configurations
Setup items (Model)

Make Configurations
Setup items (Model)
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Make Configurations
Setup items (Option Classes )

Make Configurations
Setup items (Option Classes )

Make Configurations
Model Bills Setup
Has two option classes under it.
Each option class has two optional

items.
Option class one has two procured

optional items under it.
Option Class two has two Sub

Assembly items under it.

Make Configurations
Option Class Bills Setup
Option Class1 have two procured components.

Optional check box Is checked.
Similarly option Class2 BOM is also set with two optional Sub-assemblies.

Make Configurations
Item Costs setup for components and subassemblies
Before performing Cost rollup,
ensure all components under
Model should have item cost
defined in Valuation (Frozen) cost
type .
Cost of Sub-Assemblies also

needs to be rolled up and updated
in frozen cost type since CTO cost
rollup process will perform only
single level rollup..

Make Configurations – Process Flow
Create Sales Order
Enter sales order header

and line details.
For a model item,

Click on Configurator
Button to invoke
configurator

Configure using Oracle Configurator
In the configurator window,
after Choosing appropriate
Components, Click Finish
button to complete
configuration.
In this case the option items

under option class chosen are
highlighted

Book Sales Order
Once configuration is
complete , Option
Items chosen during
configuration are
copied into the sales
order line

Progress Sales Order
Actions(N)-> Progress Order
Next step is to progress the
model line to Create
Configuration.
Upon completion of this

process, The configured
item gets created and new
line is inserted to Sales
order line.

Newly Created Configuration Item

Configuration Item
Configuration Item (star
Item), Configuration BOM
and other related entities
are created by Auto Create
configuration process.
Configured Item :
Make_Model*381006
Base Model:
Make Model

Configuration Item BOM

Make Configurations – Cost Rollup
Configuration Item cost details
Cost rollup is performed by auto create
configuration process, since profile option
‘BOM: CTO Perform Cost rollup ’ is set to Yes.
The cost is rolled up in CTO cost type by

adding up the valuation costs of all the
components in the configuration BOM for
which Include in cost rollup flag is set to Yes.
In standard costing org, the cost in CTO cost

type is copied to Frozen cost type.

Make Configurations – Cost Rollup Summary
Configured Item Make_Model*381006 Created with highlighted Components from Base Model
Cost of Configured Item

(Make_Model*381006)
Material ( 10 + 7.7+5.5) = 23.2
Resource ( 10 + 5) = 15
Total Item Cost = 23.2 + 15

= 38.2

Cost Rollup Scenarios
Case2: Pre-Configurations

Pre-Configurations – Model Structure
Create Pre-configuration from the Base Model

Pre-Configurations - Setup
Setup items (Preconfigured Item)
Create a new item in the
master organization and
assign it to the appropriate
manufacturing organization.
Enter the base model

item (on which the pre-
configured item is
configured) in the Base
Model field on the BOM
tab of the item master for
the pre-configured item.

Pre-Configurations – Process Flow
Preconfigured Item Bill
Steps to Create Pre-Config BOM
 Create a new bill of material for
your item, without
components.
 Place your cursor in the

Components region.
 From the Tools menu, choose

Configure Bill.
 A New Configurator Screen will

open

Pre-configuration in Configurator
 Configurator window is
launched from BOM.
After Choosing appropriate

button to complete configuration.
In this case the components

chosen are highlighted

Bill for completed Pre-Configuration
 Once configuration is
complete , Option Items
chosen during configuration
process in configurator are
inserted in BOM accordingly,
and completes Configuration
BOM.
 This process also creates

respective routings if there
are any for Model / Sub
Models

Pre-Configured item cost before rollup
 Pre-Configured Item cost is
zero in both CTO and Frozen
cost types since CTO cost
rollup was not done.

Run CTO cost rollup
Profile option ‘BOM: CTO
Perform Cost rollup ’ is set to Yes
and this has no impact , as it is
applicable for configurations
created from sales orders
Run ‘CTO Calculate Cost rollup’

from BOM responsibility
Choose configuration and

created days ago request
parameter.

Pre-Configurations – Item Cost Details
Pre-Configuration Item cost details
Cost is rolled up in CTO cost type
by adding up the valuation costs of
all the components in the
configuration BOM for which
Include in cost rollup flag is set to
Yes.
buy cost type does not have any

cost since Pre-configuration is a
make configuration.
The cost in CTO cost type is copied

to Frozen cost type.

Pre-Configurations – Cost Rollup Summary
Pre Configured Item Make_PreConfig Created with highlighted Components from Base Model
Cost of Pre-Configured Item

(Make_PreConfig)
Material ( 15 + 7.7+6.6) = 29.3
Resource ( 10 + 5) = 15
Total Item Cost = 29.3 + 15

= 44.3

Cost Rollup Scenarios
Case3: Buy Configurations

Buy-Configurations
Model Bill

Buy Configurations - Setup
Setup items (Model)

Setup items (Model)
Under General Planning
tab ensure the Make or Buy
attribute value is set to Buy

Setup items (Option Class )

Model and Option Class Bill
Model Bill contains two

option classes under it.
Each option class have

two optional purchased
items.

Sourcing Rule creation and assignment
Sourcing rule is created with ‘Buy
from’ sourcing type and assigned It
to Assignment set for the Buy
model.
If a configuration is procured, but

does not have buy type sourcing
rules, it will be treated as a
manufactured item for the
purposes of cost rollup

Profiles Set up – applicable for buy configuration
Procured configuration item should have
a buy type sourcing rule in the assignment
set defined by MRP: Default sourcing
Assignment Set.
For Buy item, an entry will be created in

the cost type specified in the profile BOM:
CTO Buy Cost type, based on the list price
of the configuration in the PO Validation
Organization.
 This cost is the total Rolled up Cost for

the buy configuration
Buy Configurations- Setup
Component Costs
Item cost is not set for any
components under of Buy
Model since this configuration
is procured and the cost is
rolled from list prices of
components.
Also ‘Based on Rollup’ flag

needs to be manually checked
for Buy_Model since by default
it will be unchecked.

Component List Price
Similarly list price is set in
item validation
organization for other
two components
- Buy_OC2_Comp1 : 30
- Buy_OC2_Comp 2 : 35

Buy Configurations – Process Flow
Create Sales Order
Create sales order for Base
Buy Model and click on
configurator button.
This action will invoke

configurator if the sales order
line is against a Model item.

Configurator – Choosing the options
Choose the appropriate
button to complete
configuration.
In this case the components

chosen are highlighted

Book and Progress Sales order

Configuration Item Created
Configured Item
Buy_Model*381980 Is created
from base model (Buy_Model)

Buy Configurations- Process Flow
Configured Item
Configured item is created
and its list price is rolled up
during auto create
configuration process.

Buy Configurations- Process Flow
Configuration Item BOM and sourcing Rules
Configured Item BOM and Sourcing rule

created during auto create
Configuration process

Buy Configurations – Item Cost Details
Configured Item cost details
Cost rollup is performed by auto create configuration
process, since profile option ‘BOM: CTO Perform Cost rollup ’
is set to Yes.
An entry is created in the cost type specified in the profile

BOM: CTO Buy Cost type, based on the list price of the
configuration in the PO Validation Organization.
A single level cost rollup is performed in the CTO cost type,

using Buy cost type.
If the organization is using standard costing, the frozen cost

of the configuration is updated with the cost rolled up in the
CTO cost type

Buy Configurations – Item Cost Details
Configured Item cost details
A single level cost rollup is performed
in the CTO cost type, using Buy cost
type.
If the organization is using standard

costing, the frozen cost of the
configuration is updated with the cost
rolled up in the CTO cost type

Buy-Configurations – Cost Rollup Summary
Buy Configured Item Buy_Model*381980 Created with highlighted Components from Base Model.
List Price and Cost are rolled up.
Cost of Buy-Configured Item

(Buy_Model*381980)
Material ( 12 + 30) = 42

References - Troubleshooting CTO Issues
 Note 1387196.1 -> Things to do Prior to Logging a Configure to Order (CTO) Service
Request or Bug in EBS Release 12
 Note 1565190.1 -> Configure to Order (CTO) for a Basic Assemble to Order Item (ATO) for
Release 12 [Video]

Summary
What we covered today
Learnt Concepts around CTO Cost Rollup

Basic Setups for Performing CTO Cost Rollup
Demo flows for
 Make Configurations
 Pre-configurations
 Buy Configurations
 MOS Notes to troubleshoot CTO related Issues

THANK YOU

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Cost Rollup Process For Configured Items

Copyright © 2015 Oracle and/or its affiliates. All rights reserved. | 1

 How cost rollup works in case of Configured Items (CTO)

Copyright © 2015 Oracle and/or its affiliates. All rights reserved. | 2

Copyright © 2015 Oracle and/or its affiliates. All rights reserved. | 3

Includes ATO, PTO and Hybrids

 ATO Configuration item is created from selected options using configurator

 ATO Item can be used to Create Pre-Configurations

Copyright © 2015 Oracle and/or its affiliates. All rights reserved. | 4

 Configuration item cost rollup is a single level cost rollup.

Copyright © 2015 Oracle and/or its affiliates. All rights reserved. | 5

Copyright © 2015 Oracle and/or its affiliates. All rights reserved. | 6

Copyright © 2015 Oracle and/or its affiliates. All rights reserved. | 7

Copyright © 2015 Oracle and/or its affiliates. All rights reserved. | 8

 This cost is the total Rolled up Cost for the configuration.

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Case 1: Make Configurations

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Each option class has two optional

Option class one has two procured

Option Class two has two Sub

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Option Class1 have two procured components.

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Cost of Sub-Assemblies also

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Enter sales order header

For a model item,

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In this case the option items

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Upon completion of this

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The cost is rolled up in CTO cost type by

In standard costing org, the cost in CTO cost

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Cost of Configured Item

Material ( 10 + 7.7+5.5) = 23.2

Total Item Cost = 23.2 + 15

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Enter the base model

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 Place your cursor in the

 From the Tools menu, choose