Oracle Inventory Interview Questions - 2

Q6 What is the difference between Internal and External Organizations?

The difference between Internal and External Organization is that we can not

Assign people to an External Organization.

Examples of External Organizations:

·        Workers Compensation Insurance Carriers.

·        Organizations that are recipients of third party payments from Employee’s benefits.

Q7 What is an Item Master Organization?

The organization in which the items are defined is called the Item Master Organization. Child Organizations (other organizations) refer to the Item Master for the item definition. There is no functional or technical difference between the Item Master Organization and other Organizations. However, for simplicity, it is recommended to limit the item master to just for an item defining organization.

Q8 Is it possible to have different costing methods for different organizations under the same Item Master Organization?

Yes. Even we can have dummy organizations for using different costing method for different costing method for different items within an organization.

Q9 Can we use Average Costing in an organization where WIP is also installed?

No. We can’t use Average Costing if WIP is installed.

(Below is the answer that I got from Metalink:

You CAN use average costing where WIP is installed.
You CANNOT use average costing where costs are shared among several organizations - average costing is calculated at the inventory org level.
You CANNOT change the costing method of an existing organization. You must create a new inventory org and specify the cost method before beginning any transactions)

Q10 What shall be the Costing Organization of an Org.?

If individual organization wants to have control over its own cost, we will assign the current organization itself as the Costing organization. If that is not the case, we can assign the Item Master Organization or any other organization as the costing organization.

Q11 What is a Cost Master Organization?

If costs are shared under standard costing, the organization in which the costs are defined is called Cost master Organization or Costing Organization.

Any Organization shares standard costs from a Cost master Organization can’t use Bills Of Material.

Q12 How unit cost is derived under Average Costing?

Under Average Costing, the unit cost is derived by averaging the value of all receipts of that item to inventory, on a per unit basis. Each receipt to the inventory updates the unit cost of the received item. Issues from inventory uses the current average cost as the unit cost.

                             (Transaction value + Current inventory value)

Average Cost=  ---------------------------------------------------

                             (Transaction qty. + current on-hand qty.)

Transaction Value = PO price x Transaction qty.

Q13 Under Standard Costing, how does the system get the unit cost?

We have to define unit cost of all the items as standard cost and the difference between the defined standard cost and the actual cost are recorded as variances. Under Standard Costing we can share costs across multiple organizations and hence the standard costs will be defined only in one organization. The Cost Master Organization will normally be the Item Master Organization.

Q14 What is Purchase Price Variance (PPV)?

When using the standard Costing, the difference between the defined standard cost and the actual cost are recorded as Purchase Price Variance (PPV)

PPV   =  (PO Unit Price – Standard unit Cost) x Qty. Received.

Purchase Price Variance is not used for Average Costing.

Q15 What is Invoice Price Variance (IPV)?

Invoice Price Variance (IPV) is the difference between PO unit price and the actual invoice unit price multiplied by the quantity invoiced.

IPV      =     (PO Unit Price – Invoice unit Price) x Qty. Invoiced

Q16 Does Repetitive Schedule Supports Average Costing?

No. We can’t define Repetitive Schedules in an organization that is defined as a manufacturing, average cost organization. The reason for this is that weighted average costing cannot be applied to repetitively manufactured items.

Q17 Under average costing, can we share costs between organizations?

No. We can’t share costs between organizations under average costing because average costs are maintained separately in each organization.

Q18 What is the pre-requisite for updating the subinventory parameters?

The subinventory           parameters can be updated only if there is no On-Hand quantity in that subinventory.

Q19 What is an Expense Subinventory and what all are the parameters you will select while defining an Expense Subinventory?

A subinventory where qty. is not tracked is called an Expense Subinventory. No parameters will be selected for this subinventory. (When the ‘Qty. Tracked’ parameter is not selected, automatically the other parameter go inactive.)

Q20 Can you prevent some specific items to be assigned to any subinventory other than a selected one?

Yes. Set the item attribute ‘Restrict Subinventory’ to the required Subinventory.