Create Cost Organization Relationships

In the Setup and Maintenance work area, go to the Manage Cost Organization Relationships task:

Offering: Manufacturing and Supply Chain Materials Management
Functional area: Cost Accounting
Task: Manage Cost Organization Relationships

On the Manage Accounting Cost Organization Relationships page, click Add Row.

Select the Cost Organization.

The Cost Organization Code and Legal Entity Name are derived from the Cost Organization.

Select the Item Validation Organization.

The Item Validation Organization is usually the Item Master Organization that stores all the items and their attributes relevant for costing, such as Inventory Item Flag, Asset Flag, Costing Enabled, and so on.

On the Set Assignments tab under the Relationships section, click Add Row.

Optionally, select the Reference Data Object and the corresponding Reference Data Set Name.

Assigning cost organizations to sets enables sharing of the set reference data. You can use the seeded data sets or create and use a custom data set, if necessary.

Select the Inventory Organizations tab and click Add Row.

Select the required inventory organization and set the Effective Start Date.

The effective start date determines the date from which the transactions performed in the inventory organization will be costed. For Example, if the effective start date is 01-Jan-2019 and a transaction is performed in the inventory organization dated 31-Dec-2018, then this transaction won’t be costed.

When you save the record, the Effective End Date defaults to 12/31/12 (MM/DD/YY). In this case, the year is 4712 and not 2012.

Repeat the prior step and this step for each inventory organization that you want to associate to the selected cost organization.

Select the Cost Books tab and click Add Row.

On the Create Cost Book Association dialog, select the Cost Book and Ledger.

If you select periodic average cost enabled cost book, then Periodic Average Cost is checked for the cost book association.

If you select a primary ledger, then the cost book is marked as a primary cost book.

Enter the appropriate values for the parameters listed here.

Parameter	Description
Currency	If you select a ledger, this is automatically populated. If you don’t select a ledger, then you must manually set the currency.
Accounting Calendar	If you select a ledger, this is automatically populated. If you don’t select a ledger, then you must manually set the accounting calendar.
Effective Start Date	The effective start date determines the date from which the transactions performed will be costed with this cost book.
First Opened Period	The first opened period for this cost book. This period is determined based on the effective start date.
Maximum Open Periods	The maximum number of periods than can be open simultaneously for this cost book. As a best practice, this must be same as the open GL periods for the ledger. For periodic average cost enabled cost books, this defaults to 1 and can’t be edited.
Conversion Rate Type	The conversion rate type for the selected currency.
Create Accounting	If you select a primary ledger, this is automatically selected and can’t be changed. If you select a secondary ledger, this is selected by default, but you can change it if you don’t want the corresponding transactions to be accounted. If you don’t select a ledger, then this parameter can’t be selected.
Effective End Date	You can optionally set the effective end date for this cost organization-cost book relationship.

You can optionally select the Constant Dollar Reporting Rate Type and the US Dollar Reporting Rate Type.

Repeat steps 9 through 11 for each cost book that you want to associate to the selected cost organization.

In the Period End Validations section, for each cost book associated with the cost organization, select the period end validations that must run before closing a period for the respective cost book.

For each validation, select whether they must run at Pending Period Close, Period Close, Final Period Close, or any combination of these. The Pending Period Close is only applicable for periodic average cost enabled cost books.

Also, in the Action field indicate the action that should be taken if a particular validation has failed. The value is defaulted to Error for all the validations. If you want to ignore transactions that fail the validation for a specific period, you can change the value to Ignore. You can set this back to Error after the particular period is closed.