Setting Up Purchase Overhead Costs

To set up a product with a cost component for purchase overhead:

1. Open the Product Codes form.
2. On the Purchased Overhead tab, specify this information:
   • The type, whether to use a fixed amount or variable rate
   • The amount, in the domestic currency or as a percentage of the purchased unit cost
3. When you specify a component for purchase overhead cost, you must also specify what accounts, from the Chart of Accounts, to apply to journal entries for these values:
   • The purchase overhead costs
   • Any variances associated with the purchase overhead costs

Note: 

• Purchase overhead costs can be applied only to items that have a purchase source.
• We recommend that you use the Chart of Accounts form and the Unit Code 2 form to define accounts and unit codes to use in journal entries for products that have a cost component for purchase overhead. We recommend that you create two accounts: one for recording purchase overhead applied expenses and one for recording purchase overhead variances.