Define Cost Types

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.

Cost Types for Average Costing

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 onhand, and is used to value transactions such as issues and transfers out (see transaction table below for details). Users 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 by the user.
Average   Rates cost type	Any user-defined cost type which you use to 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 they are redefined.

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 sub-element 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 a cost type:

1. Navigate to the Cost Types window.
2. Enter a cost type name.
3. 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; Average for average costing.
4. 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. This has no effect on bill assemblies or work in process.
5. Indicate whether the cost type is a multi-organization cost type to share with other organizations. If disabled, this cost type name is only available to the inventory organization that creates it. If enabled, only the cost type name is shared, not the costs.
6. Indicate whether to allow updates in this cost type.
7. If Allow Updates is set to enabled (the default, you can change this cost type by processes such as mass edits, copy cost information, cost rollup, and cost update. To "freeze" the cost information in this cost type, disable Allow Updates. Even if updates are not allowed, you can still use this cost type to report, inquire, and update Frozen costs.
8. Indicate whether this cost type is available to Oracle Engineering.
9. Select rollup options. This option Indicates whether to include the effect of component yield when rolling up costs for this cost type.
10. Indicate whether to save a snapshot of the bill of material structure for items you roll up. This creates an alternate bill. Oracle recommends that you use an alternate designator intended for the specific purpose of maintaining a snapshot of the bill being rolled up.
11. If Snapshot of Bills is enabled, you must enter an alternate name. You can then run the Indented Bill of Material Cost report for the alternate, even if the primary bill has changed.
12. Select previous level rollup options. These determine how much information is generated by the rollup. (They do not effect total unit cost.) If all options are disabled, the rollup generates one record for all prior level costs and stores the total in the material cost element. The options are as follows:
13. Element: Indicates that detail cost information by cost element is retained at previous levels. If disabled, all prior level costs are stored in the material cost element.
14. Subelement: Indicates whether to track sub-element costs at previous levels. If disabled, all prior level information does not reference a sub-element.
15. Note: For cost types to be frozen, retain detail for at least the cost element and sub-element.
16. Activity: Indicates whether to track activity costs at previous levels. If disabled, all prior level information does not reference an activity.
17. Operation: Indicates whether to track operation costs at previous levels. If disabled, all prior level information does not reference an operation.