Cost Organization Relationship

You associate a cost organization with inventory organizations and cost books by using the Manage Cost Organization Relationships task.

When defining the cost organization relationship, you need to assign an item validation organization to the cost organization. This is used to derive the item setups, including the item attributes and units of measure. It’s advised, you use an item master organization as the item validation organization and not to use it as a transactional inventory organization. Also, the cost organization and the item validation organization must have the same legal entity.

You can associate one or more inventory organizations to a cost organization, but all these inventory organizations should belong to the same business unit and legal entity, which is same as the legal entity of the cost organization. Also, an inventory organization can’t be associated with more than one cost organization.

You also need to associate at least one cost book to a cost organization. The primary ledger of the legal entity to which the cost organization belongs must be assigned to this cost book. This is the primary cost book and is used to post the transactions to the primary ledger.

You can associate additional cost books that are associated with secondary or reporting ledgers. Ledger-less cost books can be used to analyze the costing data. Accounting distributions for ledger-less cost books are not transferred to the General Ledger.

For each cost book associated with the cost organization, you define the period end validations that must run before closing a period for the respective cost book. This process verifies if any transaction has failed a validation. For example, the validations can check for any unaccounted transactions in the period. The decision to close the costing period is based on the validation result. You can specify what action should be taken if a particular validation has failed; either ignore it or show an error.

Most of the validations listed here can be run at Period Close and Final Period Close. In the case of periodic average cost enabled cost book, you can run the validations also at Pending Period Close.

• Completed work orders not closed

• Pending accounting event creation *

• Pending accounting overhead rates absorption *

• Pending cost processing

• Pending create accounting in final mode

• Pending Interface

• Pending preprocessing

• Pending preprocessing for manufacturing transactions

• Pending preprocessing of trade events

• Pending processing of trade events

• Pending resource rates and standard costs absorption *

• Pending revenue recognition events import

Note:

• The Pending accounting event creation and Pending create accounting in final mode can only be run at Final Period Close.

• The validations in the list marked with * are only applicable for periodic average cost enabled cost books.