Production Indirect Expenses

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I would like to know how different indirect expenses percentage can be defined on single cost sheet. For Instance, we have two products called Sofa and Villa. Some of the raw materials are common for both products. However, indirect expenses which would vary for each product. Softa 10% and Villa 12%. Since the indirect expenses calculation is based on the total material cost, how can I define a different indirect expenses for each product on the above scenario.

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Ludwig Reinhard Microsoft Employee on at

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Hi,

You can setup the overhead calculation in a way that an overhead of 10% is calculated for the sofa cost group and an overhead of 12% is calculated for the villa cost group.

The overhead calculation does not necessarily have to refer to the total material cost node.

Just set it up a bit different and you can achieve what you want provided that you make use of different cost groups for the sofa and villa products.

Best regards,

Ludwig

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Weaveriski 23,620 Moderator on at

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So to add a bit more, dont apply the indirect to the "total material cost" node you have, you need to make the setup more granular, as Ludwig says, use cost groups, assign cost groups to items and assign indirects to the different cost group nodes.

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Hi Ludwig,

Thank you very much for your reply.

As some of the raw materials are common for both the group (sofa and villa). How can I define different cost group for the same material.

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Ludwig Reinhard Microsoft Employee on at

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Hi,

If you setup two surcharge codes - one for 10% for the sofa and one for 12% for the villa - then you can link the same product groups to both surcharge nodes as calculation basis.

If I understood your example correctly then things should work out of the box through the setup of the costing sheet.

Do you have a test or demo machine available where you can test the setup?

Best regards,

Ludwig

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