Create a Cost Organization

A cost organization can represent an inventory organization or a group inventory organizations. This helps you manage and set policies, perform financial accounting of the supply chain transactions, and capture cost metrics for decision making and performance management.

You can either create a new cost organization or mark an existing inventory organization as a cost organization. You create a new cost organization when you want to map more than one inventory organization to the cost organization.

Before you start

Prior to creating a cost organization, you must define the legal entity, profit center business units, and the inventory organizations. For inventory organizations to be associated with cost organizations they must be mapped to profit center business units. All the inventory organizations mapped to a cost organization must belong to the same profit center business unit, and therefore, the same legal entity.

Here's what to do

1. In the Setup and Maintenance work area, go to the Manage Cost Organizations task:

   • Offering: Manufacturing and Supply Chain Materials Management

   • Functional area: Cost Accounting

   • Task: Manage Cost Organizations

2. Click the Create icon.
3. Select the required option.
   • Create new - To create a new organization.
   • Select an existing organization to define as a Cost Organization – To define an existing inventory organization as a cost organization.
4. Enter the value for these fields.

   Field	Description
   Effective Start Date	The date from which the cost organization will be effective. The default date is 01/01/0001.
   Name	Name of the cost organization .
   Status	Status of the cost organization. The cost organization needs to be active for the cost processor to cost the corresponding transactions.
   Cost Organization Code	A code for the cost organization.
   Legal Entity Name	The legal entity to which the cost organization belongs.

5. Click Save and Close.