Re: Overhead Allocation

[Ruben Mirensky <rmirensky@xxxxxxxxxx>]

In CAP100, Work Center Master, in the 2nd. screen.

The Cost Load Type is "9".  When you enter "9", your
next entries will stipulate what % and from which rate
is your overhead.

That of course will be your standard.

You could, for example, establish that your overhead
will be 200% of your labor rate.

So if you establish in your routing that an item is
going to take 2 hours in that particular Work Center,
and the Labor Rate in that Work Center is let us say,
$10.00/Hr. The standard cost of that item for that
operation, will be $20.00 (2 hours of Labor) + $40.00
of Overhead (200% of the Labor Rate).

When you report on your shop orders, negative or
positive variances are going to be larger, obviously,
because of the Overhead.

In our example, if making the item took 3 hours
instead of 2, the variance is going to be not only the
$10.00 of Labor cost, but another $20.00 because of
the overhead.  The total actual cost is going to be
$90.00, instead of the $60.00 standard, and the
variance is going to be $30.00 naturally.

Conversely, if making the item took 1 hour instead of
2, the variance is going to be $30.00 (and not $10.00)
in the opposite direction.

Regards,

Ruben A. Mirensky

--- Kusman Lim <kusman@takeda.co.id> wrote:
> BPCS 6002 plf c/s cum Mar98
>
> How to use Overhead alocation ? We use Standard
> cost. Should we use it ?
> How it is working ? Where is the journal ?
>
>
> Thanks
> Regards
> KUSMAN
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