Overhead Calculation

The analysis code assigned to an inventory item determines whether the item is subject to overhead expenses for import shipments. An overhead percentage is assigned to analysis codes on the IN Analysis Code Maintenance form.

An overhead calculation applies when you incorporate an overhead charge into the total landed cost of a shipment, and want the last cost of inventory items in that shipment to be updated when the shipment is received, based on the addition of a fixed percentage overhead, as assigned here.

Greentree calculates overhead costs applicable to inventory lines when they are added to a shipment, and the Overheads (LC) value on the Line Items form displays the calculated value when the line is selected in the table.

The overhead calculation for a line item is:

Line Cost Price x Overhead %

When the shipment line is received, the inventory item's last cost will be updated, using the line cost, plus the overhead applicable to the line. The general ledger updates with a debit to the Inventory Account, and a credit to the Overhead Recovery Account.

Note: This calculation takes place regardless of whether additional charges are added to a shipment. If additional charges are added to a shipment, the overhead percentage is calculated first, before any additional charges are apportioned and added to item costs.