Ehab Khadr

Basis Type
Allocation Charge Methods
Sub-element
Material Material Resources OSP Overhead
Overhead
Activity X
Item X X X X X
Lot X X X X X
Resource Unit X X
Resource Value X X
Total Value X

Activity:
Use the Activity basis type to assign an activity cost to an item. An activity is an action
or task that you perform in a business that uses a resource or incurs cost.
For Material Overhead sub-elements, the cost per item is calculated within each cost type
as follows:

Cost per item = (Activity occurrences / # of items) x Activity Rate

Item:
Use Item basis type to assign a fixed cost per item. For Material and Material Overhead
sub-elements, you define a fixed amount per item. For Resource, OPS, and Overhead
sub-elements, you define a fixed amount per item moved through an operation.

Lot:
Use the Lot basis type to assign a lot charge pre item or operation. For Material and
Material Overhead sub-elements, the cost per item is calculated within each cost type as
follows:

Cost per item = Rate or amount / Item’s costing lot size

For Resource, OPS, and Overhead sub-elements, the cost per item is calculated within
each cost type as follows:

Cost per item = Routing usage x Rate or amount x 1/ Item’s costing lot size.

Resource Units:
Use the Resource Units basis type to allocate overhead to an item based on the number
of resource units. For Material Overhead and Overhead ( e.g. number of direct labor
hours) sub-elements, the cost per item is calculated within each cost type as follows:

Cost per item = Overhead rate x No. of resources units earned in routing operation.

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Resource Value:
Use the Resource Value basis type to allocate Overhead to an item based on a
“percentage” of the resource value. For Material Overhead and Overhead (e.g. Direct
Labor Dollars) sub-elements, the cost per item is calculated within each cost type as
follows:

Cost per item = Overhead rate x Resource value earned in routing operation.

Total Value:
Use the Total Value basis type to allocate Overhead to an item based on a “percentage”
of the total value. For Material Overhead sub-elements, the cost per item is calculated
within each cost type as follows:

Cost per item = Total Cost – (Material Overhead earned at this level x MOH rate )

Material Overhead based on total value can be earned when you receive PO or when you
perform WIP completion transactions.

Cost Sub-elements
Material Sub-element:
 You use material sub-elements when you define the material cost element of your
items.
 You generally use one material sub-element for each item.
 The system defaults the basis type when you define item costs to speed date entry.
 You assign a default basis type of Item or Lot.

Material Overhead Sub-element:

 Define any number of Material Overhead sub-elements, such as freight, customs,
purchasing …etc. The system charges each one when you receive the item into
inventory. Using WIP module, you can also charge material overheads when you
complete you assemblies.
 You can use a separate absorption account for each material overhead sub-elements,
if necessary.
 You define category-level and organization-level defaults for make, buy and for all
items.
 Material Overhead Defaults: when you define your items, the material overhead are
defaulted into your frozen costs.
 For “Buy” items, enter Material Costs.
 For “Make” items, roll up costs.

Resources:
You can enter a fixed resource cost in two ways.

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 Enter a fixed charge on the “routing operation”.
 Use this method when the resource cost varies by item.

Overhead: