Defining Material Overhead Defaults
You can define and update default material overhead sub-elements and rates. These defaults speed data entry when defining items.
When you define items, these material overheads are defaulted into the Frozen cost type under standard costing, and into the cost type you defined to hold average rates under average costing. See: Defining Cost Types.
For buy items, enter material costs. For make items, roll up costs. You can specify an organization and category default for the same material overhead sub-element. When you have multiple defaults for the same sub-element, the category default takes precedent over the organization default. If you have two category level defaults, the default that matches the item's planning code takes precedence.
Prerequisites
You must be in the master cost organization to define material overhead defaults.
To define material overhead defaults:
You can enter a material overhead sub-element more than once. For the same material overhead sub-element, material overhead rates you assign to a specific category override any material overhead rates you assign to an organization.
The system applies the default material overhead based upon an item's planning code. This determines the material overhead sub-elements and rates for items for items you purchase, manufacture, or for all items.
Within a category or organization, if the value you enter for Item Type matches the item's Make or Buy item attribute, the system uses the material overhead information associated with it instead of the information you enter for the All items value.
The default is derived from the default activity you assigned when you defined material overhead. See: Defining Overhead.
Activity: Directly associate the activity cost with the item.
Item: Assign a fixed cost per item.
Lot: Assign a lot charge to items and operations.
Resource units: Charge overhead by multiplying the overhead amount by the number of resource units earned in the routing operation.
Resource value: Charge overhead by multiplying the overhead rate by the resource value earned in the routing operation.
Total value: Charge overhead by multiplying the total cost of the item, less material overhead earned at this level, by the material overhead rate.
8. Enter the rate or amount for the material overhead as appropriate for the basis.
Material overhead sub-elements with basis types of Total value and Resource value are usually defined as rates; those with basis types of Item, Lot, Activity and Resource units are usually defined as amounts.
9. If you select Activity for the basis, open the Activity alternative region and:
See Also
Defining Items
Defining Item Attribute Controls