Cost Organizations

Cost organizations are used to establish cost accounting policies, data defaults, and user security policies for Oracle Fusion Costing. A cost organization can potentially be spread across several physical locations or inventory organizations.

For example, you created inventory organizations for your manufacturing facility, finished goods warehouse, and distribution centers. Then, you used average costs for your items in the manufacturing facility and the finished goods warehouse, but used standard costs for the same items after they have moved to the distribution centers. In this case, your enterprise has three inventory organizations, but only two cost organizations.

Accounting and business needs determine the different cost organizations, inventory organizations, and cost book combinations required, as well as the cost profiles used to calculate transaction costs.

All inventory organizations grouped in a cost organization must belong to the same legal entity. For every cost organization, you must designate one of its inventory organizations as the item validation organization, which means that all items in the cost organization use the item validation organization's units of measure for cost calculations. Define one or more cost organizations to meet your operational structure and reporting needs.

Note: A cost organization generally represents a costing department. Take costing departments into consideration when determining the setup of departments in Oracle Fusion Human Capital Management (HCM). No system dependencies on cost organizations and costing departments are require the same setup.