Item Charges as Indirect Costs

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Posted on by victorpbr

Hi,

I just realized that when posting a purchase order, the value for the indirect cost (overhead rate and II %) was wrong.

I'm trying now to adjust these entries by creating an item charge. However when I post the item charge, only the Direct Cost is being applied, the values I entered for Overread Rate and Indirect % are not being applied. Ideally I'd like that in the value entries to see an aditional Indirect Cost line with the difference. I was only able to do that treating it like direct cost, any ideas?

Best Regards

Victor

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Community Member Microsoft Employee on at

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RE: Item Charges as Indirect Costs

Thanks!
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RE: Item Charges as Indirect Costs

Suresh,

Yes, if you still need to correct the Vendor Account payable, process a Purchase Credit Memo but post to a G/L Account since you cannot return the Items.

Thanks,

Steve
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RE: Item Charges as Indirect Costs

Thanks! We will try that just for the Indirect Costs. We still have to apply the Purchase Credit Memo so that it will reflect in our payable to the vendor.
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RE: Item Charges as Indirect Costs

Suresh,

You could revalue juts the Receipt entry to include missing costs for that positive entry. Here are the steps:

If you would like to revalue a single positive entry only, you will need to use the Revaluation Journal differently. First, find the “Entry No.” you want to revalue in the “Item Ledger Entries” list for this item.

I want to revalue the positive adjustment posted on 12/31/2013. In the Item Ledger Entries list below, the Entry No. for that Item Ledger Entry is 34:

Figure 5 – Locate the Entry No. of interest in the Item Ledger Entries list

Next, populate the Revaluation Journal by manually entering the item number, then the Entry No. Finally, enter the “Unit Cost (Revalued)” and post:

Figure 6 – Enter the item number, the Entry Number, and the Unit Cost (Revalued)

You may encounter the error regarding being out of the allowed posting date range. In this case, you might need to change the General Ledger Setup date range, the User Setup date range, and/or reopen an inventory period. The challenge here is that the General Ledger posting may be in a prior accounting period. If this is the case, you would likely post a General Journal that moves the accounting effect out of the closed period into the current period.

Hope this helps.

Thanks,

Steve
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RE: Item Charges as Indirect Costs

Hello, I am having a similar issue. In addition to the given scenario, in our case we have already SOLD the items so they are no longer in our inventory. So we can't do a Purchase Return because the system doesn't allow negative inventories.
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Community Member Microsoft Employee on at

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RE: Item Charges as Indirect Costs

Victor,

If they are paid, if you are looking to correct the Inventory Layer I would revalue the Item in question and update the correct Unit Cost. Here is an example:

If you have need the Overhead/Indirect and Direct breakdown and have not sold or consumed the Item, consider doing a Purchase Return Order and then a new Purchase Order to bring the inventory back correctly. You can apply the Return to the Invoice to zero the documents out on the Vendor.

Hope this helps.

Thanks,

Steve
victorpbr 35 on at

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RE: Item Charges as Indirect Costs

Hi Steve,

Thanks for your reply.

I see your point and agree in the cases where we have not paid yet.

How would you advise in the cases where we have already paid the invoice?
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RE: Item Charges as Indirect Costs

Victor,

The fields Overhead Rate and Indirect Cost %, on the Item Card, relate solely to the Item when it is purchased. Your initial Purchase Order had the item on the Purchase Line so the 2 values are posted when Invoiced. A Charge(Item) entry will not apply Overhead or Indirect, since it is an charge against the Item only (i.e. Freight), which Overhead and Indirect have no application too.

If I was trying to correct this entry and have NOT paid the Invoice, I would perform a Purchase Return, Copy the Original Posted Invoice. This way the original entry is reversed and a correct entry posted. Not sure the status of these items so assuming the entry can be corrected.

Hope this helps.

Thanks,

Steve