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