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How PAC process transactions and Difference between PAC & Average Costing (Doc ID 759522.1)

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APPLIES TO:
Type:
Oracle Cost Management - Version 11.5.10.2 and later
Status:
Information in this document applies to any platform.
Last Major
Update:
GOAL Last Update:

To get an idea of the order in which transactions are picked up for processing in PAC and how
it is different from average costing Related Prod
Oracle Cost M
SOLUTION
Information
Main points covered are Information Ce
======================= Cost Managem
1.Difference between pac costing and Average Costing [1417659.2]
2.Order in which transactions are processed in pac Information Ce
3.An example to illustrate the order in which transactions are processed. Manufacturing

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 [1399895.2]
1.Difference between Pac costing and Average Costing

PAC Costing Document R

=========== No References
Periodic Average Costing is a period end weighted average cost across this document
all the inventory organizations in a given PAC cost group.
It is important to note that all the cost owned transactions are
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processed first to calculate accurate PAC item cost at the of PAC period.
All the cost derived transactions are issued at one single PAC item cost How PAC proc
in that pac period. transactions a
between PAC
Average Costing Average Costi
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Average Costing is a perpetual average cost for a single inventory organization. Interface To U
Most of the time, transactions are costed in the same order of its creation. Codes [12569
This means, issue transactions are computed at different average cost at that moment. What Are The
Could Be Used
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2. Order in which transactions are processed in pac Unable To Loc
================================================== Documentatio
Referenced In
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To understand the order,one should know following basic concepts
Assign One As
Cost Owned Transactions: Multiple Failur
[1567721.1]
------------------------
Show More
Cost Owned transactions carry their own transaction values and can be sub-divided into two sub-groups :

a) These transactions will be processed first to calculate the period weighted average item costs (PWAC).

They include :
PO Receipt,
Return To Vendor,
PO Distribution Adjustment,

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 MISC transactions with a value,
Inter-Organization Transfer.

These are referred to later as Group 1a transactions.

b) These are more complex 'parent' transactions which include :

WIP Scrap,
Assembly Return,
WIP Completion

They are still 'Cost Owned' transactions, but may depend upon costs on the Group 1a transactions.

These are referred to below as Group 1b transactions.

Cost Derived Transactions :

--------------------------

Cost Derived transactions use system calculated PWAC which is based on Cost Owned transactions.

These are referred to as Group 2 transactions and include :

Account Issues,
WIP issues,
Returns from WIP,
Material Issues,
Cycle Count Adjustments,
Physical Adjustments,
Sub-Inventory Transfers,
Sales Order Issues,
MISC transactions without a user entered value.

Cost Processing of Group 1 AND 2

=====================================

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 Periodic cost processor initially calculates periodic weighted average cost for all the items having their own acquisition cost
(Group 1a).

After completing these cost-carrying transactions, it processes all cost derived transaction for items having no completion
transactions in the period, that is to say those transactions which do not require previous level transactions to be processed
first, using the PWAC calculated above.

Then it processes Group 1b transactions for items having WIP assembly Completion, Assembly Scrap,and Return
transactions, since previous level transactions are already processed for these items.

After this it fetches remaining cost derived transactions based on low level codes starting from the lowest level.

Order in which transactions are processed based on above logic is as follows:

=============================================================================

- Process periodic cost update transaction with new cost and percentage change.

- Process ALL Group 1a transactions.

Group 1 txns are :
- PO related txns :
Return To Vendor (action = 1, source = 1)
PO receipt(action = 27, source = 1)
PO delivery adjustment (action = 29, source = 1)
- Other Delivery Adjustment Txns (action = 29, source = 7,13)
- Account/Account Alias/Misc Issue with user cost (action = 1, source = 3,6,13)
- Account/Account Alias/Misc Receipt with user cost (action = 27, source = 3,6,13)

- Process ALL interorg transactions across cost groups.

Only interorg transactions having ownership changes in the receiving org are processed - that is to say, those being
processed by the receiving org PAC worker.

Those txns are :

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 - Receiving txn of Direct transfer.
- Shipment txn (FOB ship) processed by the recv. org worker.
- Receipt txn (FOB receipt) processed by the recv. org worker.

- Process periodic cost update transaction with value change for those items having no completion.

This cost will be used for cost derived txns having item without completion.

- Process ALL group 2 transactions of items having NO wip completion/return/scrap.

- Subinventory transfer txns (action = 2) for quantity < 0
- Cycle count adjustment (action = 4)
- Physical inv. adjustment (action = 8)
- Staging Transfer txns (action = 28)
- WIP negative component issue (action = 33)
- WIP negative component return (action = 34)
- Account/Account Alias/Misc Issue without user cost (action = 1, source = 3,6,13)
- Account/Account Alias/Misc Receipt without user cost (action = 27, source = 3,6,13)
- All other Issue/Receipt except Account/Account Alias/Misc Issue/Receipt, PO, RTV (action = 1 or 27, source not in =
1,3,6,13)
- Interorg txns (Action = 3,12,21) within cost group
- Interorg txns across cost group having :
- No ownership change :
- Shipment txn (FOB receipt)
- Receipt txn (FOB shipment)
- Ownership change processed by shipping org :
- Shipment txn of direct transfer
- Shipment txn (FOB ship) processed by the ship org worker.
- Receipt txn (FOB receipt) processed by the ship org worker.

- Process Group 1b txns of items having completion

- Process periodic cost update transaction with value change for those items in the current level.

This cost will be used for cost derived txns having item in the current level.

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 - Process group 2 txns of items having completion
Same criteria as above except that WIP issue/return material having been issued/returned to itself will not be included.
(These excluded txns will have been processed as part of the completion of their parents in Group 1b
Included txns are :
- WIP component issue (Action = 1, Source = 5)
- WIP component return (Action = 27, Source = 5)
- WIP negative component issue (Action = 33)
- WIP negative component return (Action = 34)

- Process the close jobs.

An example to illustrate the order in which transactions are processed in

pac and average costing:
===================================================================================

Let us assume that following transactions are done for item:A

TXN_ID ITEM TXN_TYPE COST_OWNED TXN_QTY TXN_COST

=======================================================================
1 A MISC_RECEIPT Y 4 3
2 A MISC_ISSUE N 1 NULL
3 A PCU(NEW_COST-10) Y
4 A PO RECEIPT Y 1 4
5 A PCU(VALUE CHANGE-12) Y

Average Costing
=====================

MISC RECEIPT->ITEM_COST : 3 ,ONHAND QTY : 4 ,ONAHND VALUE :12

MISC_ISSUE ->COST DERIVED TXN IS PROCESSED AT CURRENT ITEM COST
->ITEM_COST : 3 ,ONHAND QTY : (4-1)=3 ,onhand value : 12+(-1*3)=9

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 PO RECEIPT ->ITEM COST : ( 3*3)+(1*4)/(3+1)= 3.25,ONHAND QTY:4 ,ONHAND VALUE : 13

FINAL ITEM COST : 3.25

Periodic Costing
=================
From the above order mentioned ,transactions are processed as follows:

PERODIC COST UPDATE

PO RECEIPT
MISC RECEIPT
PERIODIC VALUE CHANGE
MISC ISSUE

PERIODIC COST UPDATE->ITEM COST :10

PO RECEIPT ->ITEM COST :4,ONHAND QTY:1 ,VALUE :4
MISC RECEIPT ->ITEM_COST: (4*1+4*3)/(4+1)= 3.2,ONHAND QTY:5 ,VALUE:16
PERIODIC VALUE CHANGE->ITEM_COST :(16+12)/5=5.6,ONHAND QTY:5,ONHAND VALUE:28

After proceesing all Cost Owned Txns,Pac Item Cost is 5.6

MISC_ISSUE is processed at 5.6 as->ITEM_COST:5.6 ,ONHAND QTY :4,ONHAND VALUE:28-(1*5.6)=22.4

Final PWAC of item is 5.6

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 Oracle E-Business Suite > Manufacturing > Discrete Manufacturing > Oracle Cost Management > Reports Issues > Costing Reports

Keywords
ACQUISITION COST; AVERAGE COSTING; CM_PIC_CALCS; COMPLETION TRANSACTIONS; COST; COST UPDATE; COSTING; DELIVER-TO; INTERORG; INVENTORY
PAC; PERIODIC AVERAGE COSTING; PERIODIC COST UPDATE; RECEIPT PROCESSING; SHIPMENTS; WEIGHTED AVERAGE COST; WIP

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