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Configurations with Respect to OPM Costing | ERP Implementation

Configurations of OPM Costing In Oracle R12.1

The Oracle OPM Cost Management module will be implemented at GPL for Costing of products and valuation of inventory. At GPL the accounting for product Cost will be done as per ‘Actual Costing’ methodology which is a significant change from the Standard costing approach followed so far. The system will account for the costs on the basis of Actual costing whereas Standard Costing will be used to generate the variances.

The document presents the features of the Costing solution using OPM Cost Management along with the potential gap areas.

Introduction to OPM Cost Management:

The OPM Cost management module will cater to the following:

  • Product Cost based on actual consumption of ingredients and resources.
  • Batch wise Cost of each product for every manufacturing plant
  • Valuation of FG, RM and WIP inventory.
  • Report on variance between the Standard Product Cost and Actual Product Cost
  • Product Cost as well as Batch Cost will be obtained after every period

OPM Cost management is the central module for computing Product Cost during manufacturing as well as for accounting of all Inventories related transactions including Inventory Issue, Inventory Receipt, Inventory Transfers and Inventory Adjustments. OPM Cost management is integrated with Oracle Inventory, Oracle OPM Product Development and Oracle OPM Process Execution modules.

Configurations with respect to OPM Costing:

Inventory Organizations: All Inventory organizations will be modeled as Process enabled organizations.


Configurations with respect to OPM Costing:

  1. Inventory Organizations: All Inventory organizations will be modeled as Process enabled organizations.


  1. Cost Types: Cost Types indicate the costing method being used. Two cost methods Actual and Standard shall be configured. The Standard Cost type shall be used to calculate Standard Cost where as Actual Cost Type will be used for cost accounting and inventory valuation.


  1. Cost Component Groups: Cost component categorize the costs for analytical purposes. The cost component groups will include Material, Direct Labor, Resource and Overheads etc.


  1. Cost Component classes: The cost component classes act as buckets to aggregate the costs. Some of the cost component Classes include Raw Material, Active Material, Direct Labor, QAD Cost etc.


  1. Resource Cost: Resource cost (the cost of using the resource per hour) will have to be provided for each plant resource. Overheads will also be configured as resources to absorb them on the basis of machine hours or labor hours.


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