What's the Cost Cutoff Date?

Cost Cutoff Date is a new feature that is available in Oracle Applications 11.5.
7 (DMF Family Pack G).  This functionality is developed to allow businesses the 
option of changing labor rates and overhead rates at the beginning of the 
accounting period while transactions in the next period wait for these new 
costs to be completed.  This feature exists for all the perpetual cost types 
available in 11.5: Standard, Average, FIFO and LIFO.  This will allow period 
close, cost updates, and rate changes to occur without impacting or 
interrupting business operations.

When using the Cost Cutoff Date, all cost processing for the new accounting 
period is stopped for that organization.  This allows the accountants the 
opportunity to close the previous period.  Once the new costs are set, then the 
costing is started for the new period.  This occurs by changing the cost cutoff 
date to a date in the future. 

To use this functionality, the Cost Cutoff Date field must be populated with a 
date.  This is in the Organization Parameters form.  

The Navigation Path is Inventory > Setup > Organization Parameters > 
Costing Tab.

If this field is left blank, then the old cost processing will occur.  If the 
field is populated, then no processing of costs will occur from that date 
onwards.  The cost cutoff date will use midnight as the start of the period and 
also inventory quantities are recorded at midnight.

With this new functionality, the Standard Cost Update can now run in one 
organization while other organizations are still costing transactions.  
Standard Cost Workers are launched based on organization, so this improves the 
speed of costing transactions.

To use this Feature:

For standard costing organizations if the start of the new costs is to be 
January 1 2003, that is the date that is entered.  New standard costs can then 
be established prior to January 2003, in December 2002 for example. These costs 
will not impact the December costing activities as they will not be active 
until Jan 1 2003.  No transactions that occur after the start of the day 
January 1, 2003 are costed.  This will allow the accountants to complete the 
costing for the December transactions, close the period, and run the reports 
for review.

A standard cost update can be performed using the new cost type for January 
2003.  This will update the cost of the costed items up to the end of the day 
(midnight) December 31, 2002.  The reports can then be rerun with the same 
quantity and newly updated costs.  Still NO January 2003 transactions will be 
costed.  This is true whether it takes a few days in the next period or a few 
weeks to finish the costing of the previous period.  The uncosted transactions 
will remain in the MTL_MATERIAL_TRANSACTIONS with costed_flag = N waiting for a 
cost worker to process them.  The Cost Manager will spawn no cost worker until 
the Cutoff Date is changed.

To cost the January 2003 transactions once December 2002 is properly closed, 
the Cost Cutoff Date is changed.  This can be changed to the start of the next 
period or next quarter or next year---whenever the rates need to be changed 
next.  Once changed the cost processing begins for the transactions that have 
been waiting.  For standard costs the processing of the transactions is 
immediate.  For Average, FIFO, and LIFO costing the process takes longer 
because of the need to process the transactions sequentially to keep the costs 
accurate. 

For Average, FIFO, LIFO cost organizations , Rate Cost Types are created and 
the old rates are copied to that new cost type.  This rate will not be used for 
cost processing until the Cost Cutoff Date is changed.  The cost type and the 
cutoff date need to be changed to allow the new costs to be used and the 
transactions can be processed for the new period.

For Shipping transactions, the costs also use the cutoff date.  The shipment in 
the new period will be uncosted.  If another organization receives the shipment,
the receipt will also be uncosted.  .
This is due to the fact that the 
receiving transaction requires the accounting distribution from the sending 
organization.  In standard costing, once the cutoff date is changed, the 
shipments are costed immediately.  In Average FIFO LIFO costing, the first 
uncosted transactions will cause an error.  Once the cost cutoff date is 
changed and the errored transaction reset, the transaction will be costed first 
for the shipment and then for the receipt.  All subsequent transactions will 
then be processed as well.

***Important  Note***
If this functionality is not required or desired, the Cost Cutoff Date field 
must be BLANK.  If there is a date entered in that field, no costing will occur 
on transactions for that organization from that date onwards..