Applied Overhead
Use
You can apply both percentage overhead and quantity-based overhead to reference objects. In the R/3 System, you can assign the overhead to a product by creating a
costing sheet in Customizing for Product Cost Planning. Using this costing sheet, you specify the level of overhead and the conditions under which it is calculated.
You can calculate the following:
The costing sheet thus specifies the cost elements under which the sales and administration costs are updated in costing. The
cost component structure determines the
cost components under which these costs are shown. It flags these cost components as sales and administration costs. 
In make-to-order production, the sales and administration costs are generally assigned to the product as applied overhead. The cost of goods sold for the product is passed on to Profitability Analysis. (
See also: Product Cost by Sales Order)In order-related production, repetitive manufacturing and process manufacturing, the sales and administration costs are generally passed on from Cost Center Accounting directly to Profitability Analysis. The cost of goods manufactured for the product is passed on to Profitability Analysis. (
See also: Product Cost by Order or Product Cost by Period)Prerequisites
To be able to calculate overhead in the R/3 System, you must do the following:
To define particular overhead conditions for certain reference objects, you must do the following:
Features
Applied Overhead Using Planned Data
The applied overhead is calculated using the information in the itemization for the material costed. Because the system updates an itemization for each cost component view, you can calculate applied overhead for a specific cost component view. Overhead is only calculated on one basis, such as the cost of goods manufactured or cost of goods sold. As a general rule, the cost of goods manufactured is used as the basis for calculating overhead. You make the assignment in the costing type in Customizing.
When calculating overhead, the system inserts a costing category of type G. The applied overhead is updated under the cost elements that you specified in the costing sheet in Customizing for Product Cost Controlling.
In costing with a quantity structure, overhead is calculated automatically by the system when you carry out costing.
In unit costing (such as costing without a quantity structure and base object costing), overhead is calculated when you save the cost estimate. You can calculate overhead manually by choosing the menu option Calculate overhead.
To calculate the overhead application in unit costing (such as in a cost estimate without quantity structure, or a base object cost estimate), you must assign all the costing items to cost elements. Non-assigned costing items will not be included in the overhead application.
If you want to calculate overhead in unit costing, you must enter the key of the costing sheet in the master record of the reference object. To define overhead conditions for certain reference objects, you must enter an overhead key in the master record of the reference object and create a costing sheet that refers to this key.
Applied Overhead Using Actual Data
You can calculate actual overhead for cost objects in Cost Object Controlling (CO-PC-OBJ). You can find further information under Calculating Overhead in Cost Object Controlling.
See also:
Implementation Guide (IMG) for Product Cost Controlling