Add on charges

An add on charge (AOC) is a cost or allowance that is applied to the total cost of a purchase order, ERS receiver, or an invoice. An AOC is used to pass the cost or allowance on to the customer. An added cost increases the total cost of a purchase order and an added allowance lowers the total cost of a purchase order. You can apply an add on charge at the line or header level of a purchase order.

This table shows the methods to apply add on charges and allowances to a purchase order:

Type	Description
Misc Add On Charge	Attach miscellaneous add on cost or allowance to the purchase order header and apply to the entire purchase order. The amount you add can be an amount or a percentage of the total unit for the purchase order.
Add On Charge Spread	AOC spread is a purchase order header option. It can be used to spread or divide add on costs or allowances. They are spread over the existing lines on a purchase order when you add the spread.
Add On Charges	Item add on costs and allowances are expenses that are attached to the purchase order line.

For example, freight charges are costs that you normally pass on to the customer. You apply the freight charge to the total cost of the purchase order as an add on charge. You can add tax to the add on charge on the purchase order if you originally paid tax on this charge. For example, taxes on shipping and handling. Other examples of add on charges that are typically added to a purchase order are insurance, handling charges, and shipping charges. You can also add value-added costs to purchase orders, such as production costs and art and design costs.

Add on charges that you establish as a spread or as an item add on charge for inventory items are typically landed. A landed add on charge means that the AOC is included in the inventory value. When inventory is updated for a non-standard cost company, the inventory is valued at the cost plus add on charges.