What is the offset posting for additive costs

[Former Member]

Hi Experts,

I understand that, in product cost planing and in cost object controlling, when you plan a debit, during a standard cost estimate, or post a debit, during cost object controlling, for an overhead costing sheet, or an internal activity, you are debiting, the theoretical production order in the standard cost estimate, or the actual production order, in cost object controlling you are crediting a cost center as the offset posting.

example:

Activity type debit to production order $XXX.XX

Activity type credit to cost center $XXX.XX

Where is the offset posting for additive costs in the standard cost estimate (understand there is no real off set but a theoretical one) and the the actual production order.

In the Activity type example the expenses to the cost center are off set by the credit and are placed into the value of the inventory. You are not making value out of thin air. You transformed expense to the inventory asset when it is moved back into storage.

However, if you have an additive cost how do you have that same relationship? You have the original expense debit to the cost center where is it credited back when its value is inventoried? If it is a mark up for freight or some handling, that expense has been recognized. It seems that it is not credited when it is placed into the value of the inventory.

Can someone explain this? I have configured the standard cost estimate portion and I dont see it. I have yet to complete configuration of the cost object controlling. Does additive cost even come into play there?

Thanks,

Kevin