Where does "Manufacturing Overhead" come from?

tro#1

Hi,

I have some items which got manufactured and which have a very high Unit Cost (Costing Method = FiFo)

I isolated one Finished Production order. I opened the Production Order Statistic and check Costs:

Okay:
Material Cost: 3.06 Euro
-> I can understand this amount: It is the result of all components

Okay:
Capacity Cost: 0,32 Euro
-> I can understand this amount: It is the result of the routing

What I do not understand:
Manufacturing Overhead: 104,78

The overhead cost is over 3000% of the material cost which cannot be correct.

I checked the Production order zoom, I checked the item zoom but cannot find any hint how the Manufacturing Overhead got calculated.

At the item card:
Overhead Rate = 0
Indirect Cost % = 23.26%

Do you have any idea what I should check next?

AdamRoue

It will come from the indirect cost %. This is the percentage of the capacity and materials to be added to the unit cost.

Your 23% is from the item card, what is on the line of the production order? Also check the overhead rate on teh line of the order.

There maybe an issue with teh data, or a bug, but it seems to be calculating it fine for me.

What were you expecting the indirect % to do on a manufactured item?

tro#1

Wow!
It is actually the Indirect Cost % in the Production Line.

The Indirect Cost % in the Production Line is 3100%

So my first guess is that the "Indirect Cost %" field was maintained incorrectly at the item card when the Production Order was created. Afterwards the "Indirect Cost %" field was changed from 3,100 to 23.36 percent. Is this what probably happened?

Or is there any automation which changes the "Indirect Cost %" at the item card?

Thank you so much for your fast and precise post.

AdamRoue

The production line simply copies it at the time, there is nothing I know of that will automatically change this (a modification perhaps but no idea why!), and therefore your scenario of it being incorrect, the production order being loaded, the error spotted and changed is probably the explanation you are looking for.