Example of Overhead Absorption for Miscellaneous Receipt or Subinventory Transfer (Receipt)

This example of overhead absorption for a standard costed item is applicable for miscellaneous receipt transaction and receipt of a subinventory transfer transaction.

Let's consider a miscellaneous receipt for a standard costed item. The cost details are shown in this table.

Cost Element	Standard Cost
Material	$100.00
Freight Overhead	$20.00

The accounting distributions for this miscellaneous receipt with overhead absorption enabled, which is the default setting, are listed in this table.

Accounting Line Type	Cost Element	Debit	Credit
Inventory	Material	$100.00
Inventory	Freight Overhead	$20.00
Offset	Material		$100.00
Overhead Absorption	Freight 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
Inventory	Material	$100.00
Inventory	Freight Overhead	$20.00
Offset	Material		$100.00
Offset	Freight Overhead		$20.00