To define a cost type:A cost type is a set of costs uniquely identified by name. Two cost types are predefined for you, Frozen (for standard costs) and Average. You can define and update an unlimited number of additional simulation or unimplemented cost types. Each cost type has its own set of cost controls.
In a manufacturing average costing organization, two costs types are required for inventory valuation and transaction costing: the Average cost type and a user-defined Average Rates cost type. These two cost types are defined as follows:
| Average | This cost type holds the current average unit cost of items on hand, and is used to value transactions such as issues and transfers out (see transaction table below for details). You can update costs in this cost type only by using the average cost update routine. A history is kept of all such update transactions. This cost type is seeded and does not have to be defined. |
| Average Rates cost type | This user-defined cost type holds resource to overhead associations and current overhead rates, and any other user-defined subelement rates to be used in cost rollups and to cost applicable transactions. |
Attention: You must define an Average Rates cost type to hold subelement rates/amounts. There should be no information associated with this cost type; any information found is ignored. After defining this cost type, you must select it when defining the Average Rates Cost Type parameter in the Organization Parameters window in Oracle Inventory. Rates/amount in this cost type are used, as applicable, until you redefine them. See: Setting Up Average Costing and Defining Costing Information.
| Predefined Cost Type Name | Costing Method | Purpose | Description |
|---|---|---|---|
| Frozen | Standard | Frozen standard costs | Used to value transactions and inventory balances for organizations that use standard costing. This cost type is not available for organizations using average costing. |
| Average | Average | Average costs | Used to value transactions and inventory balances for organizations that use average costing. This cost type is not available for organizations using standard costing. |
| None; user-defined | Average | Average rates | Used to hold resource to overhead associations, current overhead rates, and any other user-defined subelement rates used in cost rollups and to cost applicable transactions. This cost type is not available for organizations using standard costing. You must define a cost type for average rates. |
| None; user-defined | Either standard or average | All other cost types | Use all other cost types for any purpose: cost history, product cost simulation, or to develop future frozen costs. These costs are not implemented (not frozen) costs. You can transfer costs from all other cost types to update the Frozen cost type. |
To define, update, or delete cost information, the Cost Types: Maintain security function must be included as part of the responsibility. See: Cost Management Security Functions.
To define a cost type:Navigate to the Cost Types window.
Enter a cost type name.
Select the default cost type.
For items where costs have not been defined for the cost type, the default cost type is used as the next source of costs that the cost rollup and the inventory value reports use for items not associated with the cost type being rolled up or reported upon. You can have a cost type default to itself. The default reflects the current organization's costing method: Frozen for standard costing and Average for average costing.
Select a date on which to inactivate the cost type. You cannot inactivate the Frozen or Average cost types. You can still inquire (but not change) inactive cost types. Inquiring has no effect on bill assemblies or work in process.
Indicate whether the cost type is a multi-organization cost type to share with other organizations.
Note: If disabled, this cost type name is available only to the inventory organization that creates it. If enabled, only the cost type name is shared, not the costs.
Indicate whether to allow updates in this cost type.
If Multi-Org is selected, then the Allow Updates functionality is disabled.
If Allow Updates is set to enabled (the default), then you can change this cost type by using processes such as mass edits, copy cost information, cost rollup, and cost update. To freeze the cost information in this cost type, disable the Allow Updates functionality. Even if updates are not allowed, you can still use this cost type to report, inquire, and update Frozen costs.
Indicate whether this cost type is available to Oracle Engineering.
Select rollup options:
Indicate whether to include the effect of component yield when rolling up costs for this cost type.
Attention: Changing the Include Component Yield flag when there are open WIP jobs in the inventory organization may result in inaccurate cost variances. For example, if the standard cost rollup includes component yield and the Include Component Yield flag is clear, then backflush transactions will no longer factor in component yield and artificial variances will result.
Indicate whether to save a snapshot of the bill of material structure for items that you roll up. This creates an alternate bill. (This is available only if you have Oracle Bills of Material installed.) Oracle recommends that you use an alternate designator intended for the specific purpose of maintaining a snapshot of the bill being rolled up.
If Snapshot of Bills is enabled, you must select an alternate name. You can then run the Indented Bill of Material Cost report for the alternate, even if the primary bill has changed.
Select previous level rollup options. These options determine how much information is generated by the rollup. (These options do not effect the total unit cost.) If all options are not selected (if the options are clear), then the rollup generates one record for all prior level costs and stores the total in the material cost element. The options are as follows:
Element: Indicates that detail cost information by cost element is retained at previous levels. If not selected (cleared), then all prior level costs are stored in the material cost element.
Subelement: Indicates whether to track subelement costs at previous levels. If not selected, then all prior level information does not reference a subelement.
Note: For cost types to be frozen, retain detail for at least the cost element and subelement.
Activity: Indicates whether to track activity costs at previous levels. If not selected, then all prior level information does not reference an activity.
Operation: Indicates whether to track operation costs at previous levels. If not selected, then all prior level information does not reference an operation.
