Understanding Overhead Calculation

After you set up the overhead rule, you assign an overhead rule to the required hierarchy level such as joint venture company, joint venture, parent business unit, or business unit using the Overhead Assignment Rule program (P09J57). You use the Calculate Overhead program (R09J408) to calculate overhead for the business unit associated with the joint venture. The system selects the method from the rules assigned and checks the method's effective dates and processes the methods that are effective for the calendar month. The system applies the mathematical calculation associated with the overhead methods and calculates the overhead amount. The system uses data from various tables specific to each overhead method. After you calculate the overhead amounts, you can review and recalculate (if required) the calculated overhead amounts before you create journal entries.

Overhead is calculated once a month, and there can be only one overhead entry for the joint venture, business unit, rule, method, year, and month.