Overhead rate and Indirect cot %

The supplier charges you an amount for the goods, but when you have them there are additional storage costs etc, and you want to uplift the cost of the item to ensure you get a better profit margin analysis. There are many other reasons for the entry, but essentially it uplifts the cost of the item by a non-supplier related transaction.

Well like I said basically! Some accountants will want the overheads attributed to the item in some format, so this could be an apportioned percentage to cover storage or handling fees, it maybe the cost of owning or renting a warehouse, it could be the electricity or gas, it could be anything you want it to be. It is an additional overhead rate or percentage when bringing in and storing the item.