Valuation Structures

Valuation structures and valuation units define the granularity level at which the cost of an item is maintained. You can maintain the cost calculation at any combination of the Project, Task, Lot ID, Serial ID, and Item levels.

The average cost for an item can span more than one inventory organization. Standard Cost Planning supports items assigned with a cost profile that uses a valuation structure at the Inventory Organization or Cost Organization level. It doesn't support costs maintained in a more granular valuation structure, such as at the Subinventory or Lot level.

A valuation structure defines the level at which item costs are maintained. It contains the costing attributes that are used to segregate costs. Valuation structure is one of the attributes of an item cost profile. When a cost profile is assigned to an item, the cost processor uses the valuation structure of the cost profile to determine how to calculate the item cost.

The flexfield structure defines the costing attributes that are enabled for a valuation structure. The costing attributes include Cost Organization (mandatory), Inventory Organization, Subinventory, Locator, Country of Origin, Project, Task, Lot, Serial, and Grade. The costing attributes must be consistent with the inventory attributes, and can't be at a lower level of granularity than the inventory on hand.

The lowest node of the costing attributes in valuation structure determines the level at which the cost is maintained. For example, if the item cost would be different for different inventory organizations, then the costing attributes of the valuation structure can be at the Cost Organization - Inventory Organization level. However, if the item needs to be costed with the same cost for all inventory organizations, then the costing attributes of the valuation structure can be at the Cost Organization level.

Similarly, if the item cost needs to be maintained for each subinventory or locator, then the costing attributes of the valuation structure can be at Cost Organization – Inventory Organization – Subinventory or Cost Organization – Inventory Organization – Subinventory – Locator levels respectively.

Note:

• If you set the cost method as standard cost or periodic average cost in the cost profile, then the costing attributes of the valuation structure set on the cost profile can be only at the Cost Organization level or the Cost Organization – Inventory Organization level. For these cost methods, you can’t maintain costs at a more granular level.

• The Project and Task costing attributes are applicable only if you have opted-in for and set up Project-Driven Supply Chain.

• After transactions are performed against a valuation structure, you must not change the valuation structure by adding or deleting costing attributes. Doing so could cause unpredictable results, especially if some transactions are already costed using the original valuation structure.

Valuation structures can be of these types:

• Asset - An asset valuation structure is used for receipts of items that are valued as inventory on the balance sheet. A cost profile with an asset valuation structure is an asset cost profile.

• Expense - An expense valuation structure is used to account for receipts to inventory of items that are expensed rather than treated as assets on the balance sheet. A cost profile with an expense valuation structure is an expense cost profile.

• Consigned - A consigned valuation structure is used to account for consigned inventory transactions. A cost profile with a consigned valuation structure is a consigned cost profile.