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Former Member

OVERHEAD COST ON FINISHED GOODS

First of all i am very new to this forum & i need some help in overhead cost on FG part, My query is, is it logical to maintain the overhead cost on an FG, 25% or any required % of its conversion cost??

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    author's profile photo Former Member
    Former Member
    Posted on Jul 26, 2016 at 06:47 AM

    Hi Prince,

    The OH percentage on FG is the decision from the business, but usually it should be less than 10%. The OH we can calculate on material and conversion cost (Activity cost) only, so both may have same percentage and different percentages based on the business requirement.

    Regards,

    Ravi

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    • Former Member Former Member

      Hi Prince,

      We have a concept called costing sheet in SAP to calculate the overhead for all in-house produced materials, In costing sheet we have calculation base like material overhead and production overhead, credit keys, which represents the responsible cost center for this overhead cost and percentage overhead rates.

      We need to assign the overhead keys to material master, based on the costing sheet settings, plan overhead will calculates at the time of cost estimate and actual overhead will calculates in the CO month end activities at the time of overhead calculation.

      Based on the actual and plan percentages system will calculates the OH and post the CO document in order level i.e Dr the Order and Credit the Credit Key cost center, the cost will loaded on the order.

      I hope it is clear.

      Regards,

      Ravi

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