O R A C L E D A T A S H E E T
JD Edwards EnterpriseOne
Manufacturing – Manufacturing
Accounting
Accounting methodologies continue to evolve as standard costing falls short
for manufacturing. Newer methods better analyze for inventory, material
pricing, usage, production costs, and overhead to improve the accuracy and
completeness of your manufacturing accounting. With Manufacturing
Accounting for JD Edwards EnterpriseOne, you select the best accounting
process for effective cost and profitability management at any time during the
product lifecycle.
K E Y F E AT U RE S
Effectively manage manufacturing and
procurement costs
Improve profitability analysis
Easily adapt costing methods to
changing requirements
Costing capabilities for:
• Standard costing
• Weighted average costing
• Manufacturing last-in (actual) costing
The Issue: Cost it Right to Manage Better Returns on
Investment
In the past, standard costing had done an adequate job of providing a reasonable
estimate of product profitability. But this traditional method falls short of the mark when
product or costs change significantly and often. As a result, your business faces
inaccurate and incomplete valuation of inventory, material price and usage, production
costs, and overhead. Keeping excess unprofitable stock or using inappropriate methods
of costing on key inventory items can quickly impact your profits. If you use
commodities, operate in inflationary economies, or serve volatile markets, you need to
monitor your actual manufacturing costs closely. This ideal is also true for the increasing
number of enterprises that are moving from mass production to mass customization.
With such “market-of-one” strategies, product lines, or even single products, can change
from one production run to the next. These issues often make standard costing an
unrealistic method of deriving realistic cost of goods sold.
The Solution: Optimize Profitability with Choice of Costing
Options
Oracle’s JD Edwards EnterpriseOne Manufacturing Accounting moves beyond standard
costing methods to highlight true profitability of your business using:
Cost reporting (what the item actually costs to produce)
Variance reporting (actual versus standard costs)
Product and job costing:
Materials
Labor
Machine
Overhead
User-defined cost add-ons such as freight, taxes, duty, and electricity
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F E A T U R E / F UN CT IO N H IG H L I G HT S
Item cost level options:
• Company-wide
• Branch or plant
• Location and lot number
Item cost method options:
• Standard
• Weighted average
• Manufacturing last-in (actual)
Cost by multiple categories:
• Material
• Labor (direct and indirect)
• Machine
• Overhead
Cost extras
Cost rollup, level by level
Cost simulation
Scrap, shrink, and yield measurements
Budgeted costs by work order/rate
schedule
Automatic creation of journal entries
Variance to standard analysis
Operate in multimode manufacturing
environments
Effectively Managing Costs and Profitability
With product costing, accounting, and reporting capabilities, Manufacturing Accounting
lets you select the method that makes the most sense for effective cost and profitability
management—at any time during the product lifecycle. You establish the costing detail
necessary to adequately maintain acceptable margins based on who is buying the
product, as well as its components and manufacturing location. Consider:
Is a standard cost for the item sufficient across the company?
Is visibility into average item cost at individual branches or locations required?
Do you need to track the actual cost for each item lot?
With Manufacturing Accounting, all these options are available. Depending on the
requirements of your business, you can choose from the following:
Standard costing
—When there is so little variance from run to run that it adds little
value to assess actual product component and manufacturing costs
Weighted average costing
—Where the cost of components or ingredients changes
frequently
Manufacturing last-in (actual) costing
—Where there are frequent changes in costs
and there is a need to separately cost each work order or rate schedule
Manufacturing Accounting lets you modify the cost accounting method for a product
immediately. You can take immediate action on temporary disruptions in supply, as well
as react to periodic and long-term cost trends.
Performing Product Costing and Reporting at Desired Level
and Detail
At your discretion, maintain cost and reporting information at the branch/plant level for
different costs at different locations for identically manufactured items. After costs are
established, Manufacturing Accounting tracks those costs, reports on the variances
(such as engineering, planned, and actual), and posts manufacturing transactions
automatically to the general ledger.
Through product costing and reporting, you will be able to store and retrieve cost
information. Manufacturing Accounting also provides informational inputs to your
company’s business plan. Furthermore, you evaluate the following manufacturing
processes to determine the impact on your company’s bottom line:
Manufacturing budgets
—Direct labor, indirect labor, and overhead
Product design
—Design and manufacturing engineering
Accounting
—Gross margin by product line or item
Clearly, using a single costing method is inadequate in global, multimode manufacturing
environments. Factors that influence how manufacturing costs are captured include
regulatory reporting and contract requirements, as well as component cost fluctuations
and process variability. With Manufacturing Accounting, you get product costing,
reporting, and accounting at the level and precision you need to improve process
performance and effectively manage manufacturing and procurement costs.
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Solution Integration
This module is integrated with the following JD Edwards EnterpriseOne products and
families across your operations using common tools and a Pure Internet Architecture:
JD Edwards EnterpriseOne Financial Management
JD Edwards EnterpriseOne Human Capital Management
JD Edwards EnterpriseOne Manufacturing
Manufacturing—Shop Floor
Manufacturing—PDM
Manufacturing—ETO Foundation
Manufacturing—Lean Execution
JD Edwards EnterpriseOne Supply Chain Planning
JD Edwards EnterpriseOne Supply Management (Procurement)
JD Edwards EnterpriseOne Supply Chain Execution (Logistics)
C O N T A C T U S
For more information about JD Edwards EnterpriseOne, visit oracle.com or call +1.800.ORACLE1 to
speak to an Oracle representative.
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