Add on charges

Add on charges (AOC) are printed on invoices and can be assigned a major or minor sales class. An AOC is a cost, or allowance, that is applied to the total cost of a purchase order, ERS receiver, or invoice. The cost is passed on to the customer. An add on cost increases the total cost of a purchase order and an add on 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 these methods in which you can apply add on charges and allowances to a purchase order:

Methods	Description
Miscellaneous Add on Costs	Attach miscellaneous add on cost or allowance to the purchase order header and apply to the entire purchase order. The amount you are adding can be an amount or a percentage of the total unit for the purchase order.
Add on cost (AOC) Spread	AOC spread is an option on the purchase order header that can be used to spread or divide add on costs or allowances over the existing lines on a purchase order when you add the spread. AOC spread can only be added or maintained after you select Add to add the purchase order to the database.
Item Add on Costs	Item add on costs and allowances are expenses attached to the purchase order line.

For example, freight charges are costs that you normally pass on to the customer. You can 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 tax was originally paid on it, for example, shipping and handling. Other examples of add on charges that are 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 are established as an add on charge spread or an item add on charge for inventory items are landed add on charges . 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. See the Match User Guide.

Purchasing posts journal entries for the value of the add on charge to the inventory account that is defined for the item master. If the items are no longer in inventory, then it is posted to your inventory variance account.