oracle fusion inventory and costing concepts

Cost Organizations and Inventory Organizations

A cost organization can represent a single inventory organization, or a group of inventory organizations that roll up to a profit center business unit. You can group several inventory organizations under a cost organization for financial reporting purposes as long as they all map to a single profit center business unit. Because the inventory organizations that are assigned to a cost organization must all belong to the same business unit, it follows that they also belong to the business unit's legal entity.

The inventory organizations that are assigned to a cost organization must all belong to the same legal entity.

For each cost organization, define an item validation organization from which the processor should derive the default units of measure. You can designate one of the inventory organizations assigned to the cost organization to be the item validation organization, or you can designate the item master organization to be the item validation organization.

Cost Books

A cost book sets the framework within which accounting policies for items can be defined. You can define different cost books for each of your financial accounting, management reporting, and analysis needs. By assigning multiple cost books to a cost organization, you can calculate costs using different rules simultaneously, based on the same set of transactions.

Every cost organization must have one primary cost book that is associated with the primary ledger of the legal entity to which the cost organization belongs. You can also assign secondary ledger-based cost books for other accounting needs, as well as cost books that don't have an associated ledger, for simulation purposes. For example, you could assign a primary cost book for financial reporting, a secondary cost book for business analysis, and a third cost book to simulate results using different cost calculations.

When you assign a cost book to a cost organization, you can optionally associate it with a ledger. The cost book then inherits the currency, conversion rate, cost accounting periods, and period end validations of that ledger. If you are assigning a cost book that is not associated with a ledger, then you define these elements manually.

Prerequisites to setup cost organization 

•Legal Entity

•Business unit (profit center setting in mandatory )

•Inventory organization

•Set IDs (not required if seeded sets are used )