RE: Overhead Rate in Item Card
MahGah,
Adding to Josh's reply... Overhead Rate, on the Item Card, is a field where companies who want to apply an overhead to the Item would add a value (i.e. $2.00). This is a flat amount to be added to the Direct Cost of the Item. For example: You purchase Raw Material at $1.00 each. You set an Overhead Rate of .50. When you Post Invoice, the Unit Cost for the Item is $1.00 + .50, per UOM (Each). You will see this on the Value Entries. This field is in addition to the Indirect Cost %, where you can apply an Indirect Cost Percentage to the Item.
Now, this field is NOT that same, per say, as the field on the Work Center Card. The field is the same and works the same, except that the amount will only apply to the entries related to Output Routings effecting the Work Center. When you post an Output or Production Journal the additional Overhead Rate will be added and applied Direct Cost.
Now if I was Manufacturing an Item, I normally, per best practice, place an Overhead or Indirect Cost % against the Work Center. If I was apply the Landed Cost against a purchased raw material, I would utilize Charge(Item) to capture the additional costs.
Hope this helps.
Thanks,
Steve
