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Overhead Accounting Rules in Average costing

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in Costing 2 comments

Summary: Can you please help on the scenario if this is correct behavior.

We have an item which is defined with cost profile using average costing. To include overheads we have defined Overhead accounting rules as below.

Overhead rule of 20% of Material Group cost for HANDLING overhead for transaction type Miscellaneous Receipt.

Item is received with cost 25$ of quantity 10. Per the overhead rule 5$ (20% of 25$) of HANDLING overhead charges are added to the cost of the item. Total item cost is 30$. The items are consumed and onhand quantity is depleted to zero. Perpetual Average Cost is 30$ (25$+5$). Please note HANDLING cost element belongs to Overhead cost element type.

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