{"id":1741,"date":"2017-05-23T15:16:02","date_gmt":"2017-05-23T22:16:02","guid":{"rendered":"http:\/\/www.projectp.com\/ppblog\/?p=1741"},"modified":"2022-11-21T10:39:56","modified_gmt":"2022-11-21T18:39:56","slug":"labor-cost-variances-in-oracle-fusion","status":"publish","type":"post","link":"https:\/\/www.projectp.com\/ppblog\/2017\/05\/23\/labor-cost-variances-in-oracle-fusion\/","title":{"rendered":"How to Accurately Identify and Report Labor Cost Variances in Oracle Fusion"},"content":{"rendered":"<h2><span style=\"font-family: 'Arial','sans-serif';\">Costing Standard Rates vs. Actual Rates in Oracle Fusion<\/span><\/h2>\n<p><strong>Oracle Fusion Projects Portfolio Management (PPM)<\/strong> will cost labor transactions at a standard rate setup in the rate schedules. For example, the rate could be at the person, job, or resource class level.<\/p>\n<p><strong>Oracle Fusion Payroll <\/strong>will cost labor transactions at an actual rate setup for the employee.<\/p>\n<p>Assumptions that detail the example:<\/p>\n<ul>\n<li>Actual salary $100 \/ pay period + $30 for Benefits<\/li>\n<li>Employee charges 50\/50 of time to direct\/indirect<\/li>\n<li>Standard Costing rate 120 &amp; 30% for benefits applied as a burden<\/li>\n<\/ul>\n<p><u>The Payroll Transactions (Actual Costs)<\/u><\/p>\n<p>The payroll transaction will be processed directly into the GL and will not pass through PPM. There is no way to easily split the transactions across natural accounts for Direct &amp; Indirect charges. It will only transfer the salary and benefits transactions into separate realistic accounts and look like the following:<\/p>\n<p><a href=\"https:\/\/www.projectp.com\/ppblog\/wp-content\/uploads\/2017\/05\/Oracle-Fusion-Payroll-Actual-Rate-Costs-.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-1750 size-full\" src=\"https:\/\/www.projectp.com\/ppblog\/wp-content\/uploads\/2017\/05\/Oracle-Fusion-Payroll-Actual-Rate-Costs-.jpg\" alt=\"\" width=\"986\" height=\"171\" srcset=\"https:\/\/www.projectp.com\/ppblog\/wp-content\/uploads\/2017\/05\/Oracle-Fusion-Payroll-Actual-Rate-Costs-.jpg 986w, https:\/\/www.projectp.com\/ppblog\/wp-content\/uploads\/2017\/05\/Oracle-Fusion-Payroll-Actual-Rate-Costs--300x52.jpg 300w, https:\/\/www.projectp.com\/ppblog\/wp-content\/uploads\/2017\/05\/Oracle-Fusion-Payroll-Actual-Rate-Costs--768x133.jpg 768w\" sizes=\"auto, (max-width: 986px) 100vw, 986px\" \/><\/a><\/p>\n<p><u>The Project Portfolio Management Transactions (Standard Rate Costs)<\/u><\/p>\n<p>The PPM transactions will also process directly into the GL and will not pass into Payroll. PPM will split the transactions into Direct &amp; Indirect costs. If burden schedules are set up correctly, they will also separate the benefits &amp; other overhead costs.<\/p>\n<p><a href=\"https:\/\/www.projectp.com\/ppblog\/wp-content\/uploads\/2017\/05\/Oracle-Fusion-PPM-Standard-Rate-Costs-.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-1761\" src=\"https:\/\/www.projectp.com\/ppblog\/wp-content\/uploads\/2017\/05\/Oracle-Fusion-PPM-Standard-Rate-Costs-.jpg\" alt=\"\" width=\"990\" height=\"373\" srcset=\"https:\/\/www.projectp.com\/ppblog\/wp-content\/uploads\/2017\/05\/Oracle-Fusion-PPM-Standard-Rate-Costs-.jpg 990w, https:\/\/www.projectp.com\/ppblog\/wp-content\/uploads\/2017\/05\/Oracle-Fusion-PPM-Standard-Rate-Costs--300x113.jpg 300w, https:\/\/www.projectp.com\/ppblog\/wp-content\/uploads\/2017\/05\/Oracle-Fusion-PPM-Standard-Rate-Costs--768x289.jpg 768w\" sizes=\"auto, (max-width: 990px) 100vw, 990px\" \/><\/a><\/p>\n<p><u>Balance Review When Closing the Period<\/u><\/p>\n<p>Based on the above transactions, a few balances need to be reviewed and reconciled at the end of the period.<\/p>\n<p><a href=\"https:\/\/www.projectp.com\/ppblog\/wp-content\/uploads\/2017\/05\/Oracle-Fusion-Account-balance-reconciliation.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-1753\" src=\"https:\/\/www.projectp.com\/ppblog\/wp-content\/uploads\/2017\/05\/Oracle-Fusion-Account-balance-reconciliation.jpg\" alt=\"\" width=\"985\" height=\"213\" srcset=\"https:\/\/www.projectp.com\/ppblog\/wp-content\/uploads\/2017\/05\/Oracle-Fusion-Account-balance-reconciliation.jpg 985w, https:\/\/www.projectp.com\/ppblog\/wp-content\/uploads\/2017\/05\/Oracle-Fusion-Account-balance-reconciliation-300x65.jpg 300w, https:\/\/www.projectp.com\/ppblog\/wp-content\/uploads\/2017\/05\/Oracle-Fusion-Account-balance-reconciliation-768x166.jpg 768w\" sizes=\"auto, (max-width: 985px) 100vw, 985px\" \/><\/a><\/p>\n<p>An entry is needed at the end of the period to adjust the payroll variance and report accurately. The labor variance measures the actual and expected cost of labor.<\/p>\n<p><a href=\"https:\/\/www.projectp.com\/ppblog\/wp-content\/uploads\/2017\/05\/Oracle-Fusion-Period-Close-Adjustment.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-1754\" src=\"https:\/\/www.projectp.com\/ppblog\/wp-content\/uploads\/2017\/05\/Oracle-Fusion-Period-Close-Adjustment.jpg\" alt=\"\" width=\"986\" height=\"209\" srcset=\"https:\/\/www.projectp.com\/ppblog\/wp-content\/uploads\/2017\/05\/Oracle-Fusion-Period-Close-Adjustment.jpg 986w, https:\/\/www.projectp.com\/ppblog\/wp-content\/uploads\/2017\/05\/Oracle-Fusion-Period-Close-Adjustment-300x64.jpg 300w, https:\/\/www.projectp.com\/ppblog\/wp-content\/uploads\/2017\/05\/Oracle-Fusion-Period-Close-Adjustment-768x163.jpg 768w\" sizes=\"auto, (max-width: 986px) 100vw, 986px\" \/><\/a><\/p>\n<p><u>Financial Reporting<\/u><\/p>\n<p>Finally, the financial report balances should include the variance account. The table below shows the credits and will net to the $130 from Payroll in our example:<\/p>\n<p><a href=\"https:\/\/www.projectp.com\/ppblog\/wp-content\/uploads\/2017\/05\/Oracle-Fusion-Financial-Reporting.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignright size-full wp-image-1766\" src=\"https:\/\/www.projectp.com\/ppblog\/wp-content\/uploads\/2017\/05\/Oracle-Fusion-Financial-Reporting.jpg\" alt=\"\" width=\"984\" height=\"328\" srcset=\"https:\/\/www.projectp.com\/ppblog\/wp-content\/uploads\/2017\/05\/Oracle-Fusion-Financial-Reporting.jpg 984w, https:\/\/www.projectp.com\/ppblog\/wp-content\/uploads\/2017\/05\/Oracle-Fusion-Financial-Reporting-300x100.jpg 300w, https:\/\/www.projectp.com\/ppblog\/wp-content\/uploads\/2017\/05\/Oracle-Fusion-Financial-Reporting-768x256.jpg 768w\" sizes=\"auto, (max-width: 984px) 100vw, 984px\" \/><\/a><\/p>\n<p>If the rates are maintained accurately and regularly, the variances should remain small.<\/p>\n<p>If the Labor Variance is favorable, the company pays less than its standard cost for its direct labor.<\/p>\n<p>If the Labor Variance is unfavorable, the company pays more than its standard cost for its direct labor.<\/p>\n<p>If there is a significant difference, in either case, the standard labor rates or the burden rates need to be reviewed and updated.<\/p>\n<p>The Labor Variance accounts and the indirect labor cost accounts roll up to a summary indirect cost account, which is reported below the line in the P&amp;L to derive net margins.<\/p>\n<p>Questions? <a href=\"http:\/\/www.projectp.com\/demos\/contact_us.cgi\">Contact us<\/a>!<\/p>\n<p>Project Partners has the experience to help you achieve the full potential of your Oracle Fusion Applications.<\/p>\n<p><a href=\"http:\/\/www.projectp.com\/demos\/index.cgi\">Visit our resource library for more Oracle insights<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The payroll transaction will be processed directly into the GL and will not pass-through PPM. There is no way to easily split the transactions across natural accounts for Direct &#038; Indirect charges. It will only transfer the salary and benefits transactions into separate realistic accounts. Continue reading:<\/p>\n","protected":false},"author":79,"featured_media":3304,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[181],"tags":[],"class_list":["post-1741","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-oracle-cloud"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.projectp.com\/ppblog\/wp-json\/wp\/v2\/posts\/1741","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.projectp.com\/ppblog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.projectp.com\/ppblog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.projectp.com\/ppblog\/wp-json\/wp\/v2\/users\/79"}],"replies":[{"embeddable":true,"href":"https:\/\/www.projectp.com\/ppblog\/wp-json\/wp\/v2\/comments?post=1741"}],"version-history":[{"count":0,"href":"https:\/\/www.projectp.com\/ppblog\/wp-json\/wp\/v2\/posts\/1741\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.projectp.com\/ppblog\/wp-json\/wp\/v2\/media\/3304"}],"wp:attachment":[{"href":"https:\/\/www.projectp.com\/ppblog\/wp-json\/wp\/v2\/media?parent=1741"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.projectp.com\/ppblog\/wp-json\/wp\/v2\/categories?post=1741"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.projectp.com\/ppblog\/wp-json\/wp\/v2\/tags?post=1741"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}