Example of Overhead Absorption for Trade in Transit Receipt in Supplier Facing Business Unit for Global Procurement
This is an example of overhead absorption for a Trade in Transit Receipt transaction of drop ship delivery in the supplier facing business unit.
Let's consider a drop ship purchase order for a standard costed item. The purchase price is $150 and quantity is 1. The standard cost details for the item are shown in this table.
Cost Element |
Standard Cost |
---|---|
Material |
$100.00 |
Overhead |
$20.00 |
The accounting distributions for the drop ship delivery with overhead absorption enabled are listed in this table.
Accounting Line Type |
Cost Element |
Debit |
Credit |
---|---|---|---|
Trade In-Transit Valuation |
Material |
$100.00 |
|
Purchase Price Variance |
Material |
$50.00 |
|
Trade Clearing |
Material |
$150.00 |
|
Trade In-Transit Valuation |
Overhead |
$20.00 |
|
Overhead Absorption |
Overhead |
$20.00 |
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 |
---|---|---|---|
Trade In-Transit Valuation |
Material |
$100.00 |
|
Purchase Price Variance |
Material |
$50.00 |
|
Trade Clearing |
Material |
$150.00 |
|
Trade In-Transit Valuation |
Overhead |
$20.00 |
|
Purchase Price Variance |
Overhead |
$20.00 |