Example of Overhead Absorption for Interorganization Transfer Return
This is an example of overhead absorption for the interorganization transfer return of a standard costed item.
Let's consider an interorganization transfer return for a standard costed item from the previous example. Note that the interorganization transfer return derives the overhead absorption setting from the corresponding forward flow.
The accounting distributions for this interorganization transfer return with overhead absorption enabled are listed in this table.
Accounting Line Type |
Cost Element |
Debit |
Credit |
---|---|---|---|
Inventory |
Material |
$110.00 |
|
Inventory |
Overhead |
$30.00 |
|
Transfer Price Variance |
Material |
$10.00 |
|
Trade In Transit Valuation |
Material |
$100.00 |
|
Trade In Transit Valuation |
Overhead |
$20.00 |
|
Cost Variance |
Overhead |
$30.00 |
However, if you've set the transaction type to not absorb the overhead, then the accounting distributions created are listed in this table.
Accounting Line Type |
Cost Element |
Debit |
Credit |
---|---|---|---|
Inventory |
Material |
$110.00 |
|
Inventory |
Overhead |
$30.00 |
|
Trade In Transit Valuation |
Material |
$100.00 |
|
Trade In Transit Valuation |
Overhead |
$20.00 |
|
Transfer Price Variance |
Material |
$10.00 |
|
Transfer Price Variance |
Overhead |
$10.00 |