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. Add-on charges can be applied on the line or on the header level of the PO.
This table shows the methods by which to apply add-on charges and allowances to a purchase order:
| Type | Description |
|---|---|
| Misc Add On Charge | Attach miscellaneous add-on costs and allowances to the
purchase order header to apply it to the entire purchase order. The amount added 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. Use AOC spread out 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 are normally passed on to the customer. Apply the freight charge to the total cost of the purchase order as an add-on charge. Tax can be added to the add-on charge on the PO if tax was paid 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 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.