A costing system is designed to monitor the costs incurred by a business. The system is comprised of a set of forms, processes, controls, and reports that are designed to aggregate and report to management about revenues, costs, and profitability. The areas reported upon can be any part of a company, including its customers, departments, facilities, processes, products and services, research and development, and sales regions. How a Costing System is UsedThe information issued by a costing system is used by management for a variety of purposes, including: Fine-tuning operations to generate higher profitability Deciding where to cut costs in the event of a business downturn Matching actual costs incurred against budgeted cost levels for control purposes Creating strategic and tactical plans for future operations
How Costing Reports Are UsedThe reports of a costing system are intended for internal use, and so are not subject to the reporting requirements of any of the accounting frameworks, such as GAAP or IFRS. Instead, management can decide what types of information it prefers to see, which information to ignore, and how the results are to be formatted and distributed for its consumption. Typical reports created by a costing system include: Budget-versus-actual reports for costs incurred Profitability reports for customers, sales regions, stores, products, and/or product lines Expense trend reports that show expenses incurred by month for many consecutive months
These reports may be accompanied by additional information assembled by the accounting department, which provide details regarding how certain costs were incurred and who authorized them. Types of Costing SystemsThere are two main types of costing systems. A business can accumulate information based on either one, or adopt a hybrid approach that mixes and matches systems to best meet its needs. The primary costing systems are noted below. Job Costing SystemMaterials, labor, and overhead costs are compiled for an individual unit or job. This approach works best for unique products, such as custom-designed machines or consulting projects. The cost accumulation process is highly detailed and labor-intensive. Process Costing SystemMaterials, labor and overhead costs are compiled in aggregate for an entire production process, and are then allocated to individual production units. This approach works well for large production runs of identical items, such as a production run of 100,000 cell phones. The cost accumulation process is highly efficient and portions of it can possibly be automated. Activity-Based CostingAnother costing system option is activity based costing (ABC). ABC was developed in response to concerns that overhead costs are rarely allocated in an appropriate manner, and involves a finer degree of differentiation in determining how overhead costs are assigned to different cost pools, and then how the costs in those pools are allocated to cost objects. An ABC system can be difficult to set up and operate, and so works best when designed for very specific cost allocation projects that have clearly defined boundaries. You can use the Reports and Analytics work area to access predefined reports and analytics that are related to your role. The reports available for Oracle Cost Accounting are listed here. You can generate these reports for a cost organization and cost book combination. You can optionally specify an item range or item category range to filter the information in the reports. Costing Account Balances Report The Costing Account Balances Report provides information for reviewing and reconciling account balances, typically at period end. You must specify the account type and the starting and ending period for which you want to generate this report. In-Transit Valuation Report The In-transit Valuation Report provides information to review inventory value of items that are in transit. The in-transit inventory costed or accounted value can be viewed as of a specific date. You can optionally specify the valuation type as Asset, Expense, or Consigned. Also, you can generate the report for the flow types listed here: In Transit Interorganization transfer Transfer Order In Transit Interorganization transfer Transfer Order In Transit Intraorganization transfer Interorganization Transfer Order Issue to Expense with Receipt All
You can summarize the information in the report by selecting the required layout from the advanced options when generating the report. The layout options available for this report are listed here: By Inventory Org, Category, Item Shipment By Item, Inventory Org, Shipment
Inventory Valuation Report The Inventory Valuation Report provides the information to review the value of your inventory based on costed or accounted records as of a specific date. You can analyze the value of the assets in your inventory in various ways and at varying points in time. Typically, you would use this report at period end to reconcile on-hand inventory quantity and value. You must specify the valuation type as Asset, Expense, or Consigned. Optionally, you can specify whether to include zero cost items and negative inventory quantity in the report. You can also specify whether ignored intravaluation unit transfers must be included in the report. You can summarize the information in the report by selecting the required layout from the advanced options when generating the report. The layout options available for this report are listed here: By Item Category, Item, Valuation Unit By Inventory Organization, Item Category, Cost Element By Item, Valuation Unit
Layer Inventory Valuation Report The Layer Inventory Valuation Report provides the information needed to review the value of inventory, as maintained for each delivery, as of a specific date. This report helps you to reconcile the inventory value at the level of specific deliveries. You must specify the valuation type as Asset, Expense, or Consigned. Optionally, you can specify whether to include zero cost items and negative inventory quantity in the report. You can summarize the information in the report by selecting the required layout from the advanced options when generating the report. By Item, Valuation Unit, Deliveries is the only layout option available for this report. Period In-transit Valuation Report The Period In-transit Inventory Valuation Report provides information to reconcile end of period in-transit inventory balances. You can use this report to review the costed or accounted inventory balance in transit for a prior period or for the most current value of in-transit inventory in the current period. You must specify the valuation type as Asset, Expense, Consigned, or Asset and Expense. Also, you must specify whether to include zero cost items in the report and whether to summarize the total cost or show costs at the cost element level in the report. You can optionally specify the flow type for which the report must be generated. In Transit Interorganization transfer Transfer Order In Transit Interorganization transfer Transfer Order In Transit Intraorganization transfer Interorganization Transfer Order Issue to Expense with Receipt All
This report uses the data generated by the Cost Reports Processor that builds the inventory value snapshot information for faster performance of the report. You can download the report to a spreadsheet for a flattened view of the data and leverage native spreadsheet capabilities. You can summarize the information in the report by selecting the required layout from the advanced options when generating the report. The layout options available for this report are listed here: By Inventory Organization, Category, Item, Shipment Detailed By Inventory Organization, Item Summary No Summarization
Period Inventory Valuation Report The Period Inventory Valuation Report provides information to reconcile end of period inventory balances. You can review the costed or accounted inventory balance for a prior period or for the most current value of inventory in the current period. This report is useful for reporting inventory balances when you have a high volume of transactions. You must specify the valuation type as Asset, Expense, or Consigned. Additionally, you can specify whether to include zero cost items and negative inventory quantity in the report. You can also generate the report to display inventory value only for transactions that are yet to be accounted. Lastly, you can specify whether to summarize the total cost or show costs at the cost element level in the report. This report uses the data generated by the Cost Reports Processor that builds the inventory snapshot information for faster performance of the report. You can summarize the information in the report by selecting the required layout from the advanced options when generating the report. The layout options available for this report are listed here: By Item Category, Inventory Organization, Subinventory By Inventory Organization, Subinventory
Period Layer Inventory Valuation Report The Period Layer Inventory Valuation Report provides information to review end of period and current inventory FIFO layer values. The report considers all receipt layers with quantity remaining that make up the inventory balance. You must specify the valuation type as Asset, Expense, or Consigned. Additionally, you can specify whether to include zero cost items and negative inventory quantity in the report. Lastly, you can specify whether to summarize the total cost or show costs at the cost element level in the report. This report uses the data generated by the Cost Reports Processor that builds the inventory value snapshot information for faster performance of the report. You can download the report to a spreadsheet for a flattened view of the data and leverage native spreadsheet capabilities. You can summarize the information in the report by selecting the required layout from the advanced options when generating the report. The layout options available for this report are listed here: Work in Process Inventory Valuation Report The Work in Process Inventory Valuation Report provides information for reviewing and reconciling Work-in-Process Inventory Value. You can review this information at period end to analyze work orders that are released, completed, or cancelled status. You can review the costed or accounted value as of a given date. You can optionally specify the work method, work order type and subtype, and the work order scope. You can also specify whether the information in the report must be sorted in the ascending or descending order. You can summarize the information in the report by selecting the required layout from the advanced options when generating the report. The layout options available for this report are listed here: By Plant, Item By Work Order Type, Work Order Subtype, Work Order By Plant, Item, Work Order By Item Category, Item, Work Order
You can also manually generate these reports or schedule automatic generation of these reports from the Scheduled Processes work area. Note: The reports listed here are obsolete:You can instead use the Analyze Product Gross Margin page or the pre-defined OTBI report, Gross Margin Report, from Shared Folders/Supply Chain Management/Cost Management/Transactional Analyses Samples. Tips and ConsiderationsYou must make a note of these points with reference to the reports and analytics: The cost reports processor builds the snapshot of information for faster performance of the reports. Therefore, as a best practice, you should consider submitting the Cost Reports Processor with a separate run control. Preferably, schedule the Cost Reports Processor to build your snapshot information periodically before you generate the report. When you run the reports processor for the first time, it might take more time as the snapshot is built for each costing period since the first period. In the case of very high-volume transactions, you can generate the period valuation reports in the CSV format for faster performance. You can generate the period valuation reports to provide a snapshot of prior period information or the valuation as-of-today. But you can't generate the report for a specific date. Intravaluation unit transfers aren't shown in the report if the Account Intravaluation Unit Transfers option isn't selected in the corresponding cost profile. This is applicable for the Period In-transit Valuation Report and Period Layer Inventory Valuation Report. The Period In-transit Valuation Report considers the quantities put away into inventory for relieving the value from the in-transit account. Therefore, the report shows the in-transit value in the receiving organization for items received but not put away. In the case of a transfer between an Expense valuation unit and an Asset valuation unit, the in-transit is recorded for the sending organization until physical receipt isn't recorded in the receiving organization. Therefore, the Period In-transit Inventory Valuation Report shows the in-transit amounts in negative for the receiving organization valuation unit and positive for the sending organization valuation unit in the No Summarization layout. However, in the summarized and detailed layouts of the report the amounts are summed up and the net value is shown. When generating the Period In-transit Valuation Report you can set the Valuation Basis parameter as costed or accounted. The costed and accounted amounts might differ in these cases:
Predefined OTBI ReportsYou can also use the various predefined OTBI reports to generate, review, and analyze the relevant information. These reports can be accessed from Shared Folders/Supply Chain Management/Cost Management/Transactional Analyses Samples. Cost Comparison : This report helps you to compare the rolled-up costs of your make items between two cost scenarios. This is applicable only for standard costs. The available parameters are Cost Organization, Cost Book, Valuation Unit, Root Assembly, Current Cost Scenario, and Base Cost Scenario. Cost Scenario Exceptions : This report lists the exceptions or errors encountered by a cost scenario across different events such as rollup, publish, and so on. The available parameters are Scenario, Event Number, Type, and Start Date. Cost Transaction Report : The report provides a listing of costing transactions that can be viewed by transaction type or a period. The available parameters are Cost Organization, Cost Book, Effective Start Date, Effective End Date, Transaction Type, and Transaction Reference. Costed BOM : The report provides an indented view of the rolled up cost of a bill of material. The available parameters are Cost Organization, Cost Book, Valuation Unit, Scenario, Root Assembly, Scenario Effective From, and BOM Level. Costed BOM with Cost Element : The available parameters are Cost Organization, Cost Book, Valuation Unit, Scenario, Root Assembly, Scenario Effective From, and BOM Level. Costing On Hand Balances : This report provides an inventory value (costed quantity and cost) for an item for the specified cost organization, cost book, and valuation unit combination. The available parameters are Cost Organization, Cost Book, and Valuation Unit. Compare Item Cost (Different Books) : This report is available under the Item Cost Comparison folder. The available parameters are Cost Organization, Item, Base Cost Book, Current Cost Book, Base Cost Date, Current Cost Date, Base Cost Status, Current Cost Status, Base Valuation Unit, and Current Valuation Unit. Compare Item Cost (Scenario to Published Cost) : This report is available under the Item Cost Comparison folder. The available parameters are Current Cost Scenario, Base Cost Organization, Base Cost Book, Base Cost Status, Base Cost Date, Item, and Valuation Unit. Compare Item Cost (Scenario to Scenario) : This report is available under the Item Cost Comparison folder. The available parameters are Cost Organization, Cost Book, Item, Valuation Unit, Current Cost Scenario, and Base Cost Scenario. Cost Accounting Period End Validation Error Interface Transactions : This report is available under the Period End folder. The available parameters are Period, Cost Organization, Cost Book, Error Code, and Error Message. Cost Accounting Period End Validation Error Transactions : This report is available under the Period End folder. The available parameters are Period, Cost Organization, Cost Book, Error Code, Error Message, Inventory Organization, Reference Document Type, and Transaction Type. Cost Accounting Period End Validation Summary : This report is available under the Period End folder. The available parameters are Period, Cost Organization, and Cost Book. Distribution Details by Account : This report is available under the Cost Accounting Distribution folder. The available parameters are General Ledger Account, Legal Entity, Cost Organization, Cost Book, Fiscal Period, Item, Transaction Type, Cost Status, Accounting Status, General Ledger Transfer Status, Item Catalog, Item Category, Resource, Transaction Number, Reference Number, and General Ledger Batch. Distribution Summary by Period : This report is available under the Cost Accounting Distribution folder. The available parameters are Legal Entity, Cost Organization, Cost Book, General Ledger Account, and Period. Gross Margin Report : The available parameters are Business Unit, Cost Organization, Start Date, and End Date. In transit On hand Valuation Details : This report is available under the In transit On hand folder. The available parameters are Cost Organization, Cost Book, Inventory Organization, As of Date, Consigned, Expense, Flow Type, Reference Type, Reference Document, Document Type, and Document Number. In transit On hand Valuation Summary : This report is available under the In transit On hand folder. The available parameters are Cost Organization, Cost Book, Inventory Organization, As of Date, Consigned, Expense, and Flow Type. Item Cost Details : The available parameters are Cost Organization, Cost Book, Valuation Unit, Scenario, Item, and Cost As of Date. Dashboard Item Cost Details (Estimated PPV Impact with PO Details) : This report is available under the Item Cost folder. The available parameters are Cost Organization, Cost Book, Scenario Number, Cost Status, Item, Item User Item Type, Item Lifecycle Phase, Base Model, As of Date, and Valuation Unit. Item Cost Details : This report is available under the Item Cost folder. The available parameters are Cost Organization, Cost Book, Scenario Number, Cost Status, Item, Item User Item Type, Item Lifecycle Phase, Base Model, As of Date, and Valuation Unit. Item Cost Details (Estimated PPV Impact) : This report is available under the Item Cost folder. The available parameters are Cost Organization, Cost Book, Scenario Number, Cost Status, Item, Item User Item Type, Item Lifecycle Phase, Base Model, As of Date, and Valuation Unit. Item Cost Details (On hand Impact) : This report is available under the Item Cost folder. The available parameters are Cost Organization, Cost Book, Scenario Number, Cost Status, Item, Item User Item Type, Item Lifecycle Phase, Base Model, As of Date, and Valuation Unit. Inventory Turns : This report is available under the On hand and Margin report. The available parameters are Cost Organization, Cost Book, Inventory Organization, User Item Type, Item, Start Date, and End Date. Where Used : The available parameters are Cost Organization, Cost Book, Scenario, Valuation Unit, Root Component, and BOM Level. Work Order Job Summary : This report is available under the Work Order Costs folder. The available parameters are Cost Organization, Cost Book, Inventory Organization, Work Order Status, Work Order, Product, Completion Age, Release Age, and WIP Balance. Work Order Variance Details : This report is available under the Work Order Costs folder. The available parameters are Cost Organization, Cost Book, Inventory Organization, Work Order Status, Work Order, Product, and Variance Amount.
OTBI Subject AreasIn addition to the predefined reports, you can generate custom reports and analytics by using the subject areas listed here: Cost Accounting Real Time COGS and Gross Margin Real Time Inventory Valuation Real Time Item Cost Real Time Work Order Costs Real Time Cost Accounting Period Close Real Time Resource Rates Real Time Overhead Rates Real Time Landed Costs Real Time
For more information on accessing and modifying reports and analytics, refer to the guide Creating and Administering Analytics and Reports.
Which reporting is used in cost accounting?
Cost Managerial Accounting Reports
Managerial accounting computes the costs of articles that are manufactured. All raw material costs, overhead, labor, and any added costs are taken into deliberation.
What type of system is cost accounting?
A form of management accounting, cost accounting examines all variable and fixed expenses and is meant for internal eyes only. Company decision-makers use the results to identify which products and services are most profitable and which ones cost too much to produce relative to sales.
Is cost accounting internal reporting system?
Cost accounting is a type of managerial accounting that focuses on a company's costs with the goal of improving profit and efficiency. Cost accounting is an internal accounting system for the benefit of managers and employees.
What is reporting system in accounting?
Objective of financial reporting
This is the financial reporting system. The system is also used to monitor the effectiveness of the business and to help conclude relevant transactions (for example; many goods/services are sold on credit, giving the customer a number of days/months to settle their debt.
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