Process Manufacturing - EBS (MOSC)

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Overhead costs applied multiple times on the same lot when transferred between organizations

edited Jun 3, 2020 6:52PM in Process Manufacturing - EBS (MOSC) 7 commentsAnswered ✓

We are process enabled organization currently using lot cost process for costing. Lot controlled item I1 has an overhead cost associated. It is purchased in Org A or in Org B, but is further processed only in Org B. Hence it is transferred to Org B using intransit shipment when it is purchased in Org A. The overhead costs are defined for this item in both the organizations A and B as they could be procured anywhere. The issue arises only when the item is purchased in Org A.

The item I1 is purchased using a PO and received into lot Lot1 in Org A. The cost of the lot includes the overhead cost associated with it. Partial quantity of the lot is transferred to Org B for further processing. When the lot cost process is run in Org B, it is noted that overhead cost defined in Org B is also applied on top of the lot cost from Org A. We had to perform lot cost adjustment in Org B to bring the cost down to the same as Org A.

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