Defining Fixed Overheads

Use the Fixed Overheads window to set up and maintain overheads. An overhead is a cost associated with a resource other than the resource usage assigned in the routing. Assume you need a laborer to clean MIXER1 after each use. To account for the cost of cleanup, instead of adding another component cost to each item that uses MIXER1, you can assign a overhead to the items being produced by that laborer on MIXER1. 

The overhead assignment would be the time it takes the laborer to clean MIXER1 multiplied by the cost per hour for the laborer. In addition, you can add other costs into the overhead (for such things as cleaning agents).

To reflect overheads in the cost of a product or an ingredient, first create the overhead using this window. In order to assign overheads to resources, you must first set up a resource to be used as the overhead. As in the example above, this would be the MIXER1 resource. You must then define a cost for that resource. Then, when assigning overheads, you will assign the amount of that resource needed to perform the overhead. As in the example above, you may need to use .25 hours of MIXER1 for cleanup.

The following fields are required on the Fixed Overhead window and must be set up prior to defining overheads. The application where each field is set up is shown in parentheses:

• Item (Oracle Inventory)
• Inventory Organization (Oracle Inventory)
• Calendar/Period
• Cost Type
• Resource (OPM Process Planning)
• Cost Component Class
• Cost Analysis Code
  
  Note: You cannot add new cost overhead information for a period that is closed.

To define fixed overheads:

1. Navigate to the Fixed Overheads window.
2. Enter the Item code for the product or intermediate to which this overhead is assigned. For example, if the product Blue Paint uses MIXER1 as a resource, and you assign a overhead for cleanup of MIXER1 to the process for making Blue Paint, then enter the item code for blue paint.
3. Enter a valid Calendar code. The overhead only applies to this item when associated with this calendar.
4. Enter a valid Period code within this calendar. The overhead will only apply to this item when associated with this calendar/period.
   
   Note: Overhead details in a closed period can only be viewed and cannot be edited.
5. The Cost Type for the specified calendar displays.
6. Base Currency Code displays the base currency of the legal entity. This field is for display only.
   

Overhead Details

7. Enter the code for the Resource overhead. For example, if the product Blue Paint uses MIXER1 as a resource, and you assign a overhead for cleanup after each use of MIXER1, then enter the code for MIXER1.
8. Enter Component Class Code you defined as overhead usage for this resource.
9. Enter the Analysis Code under which this overhead appears in cost details.
10. Enter the number of this resource used in the production of the item inResource Count. For example, if it takes one laborer to cleanup MIXER1 after each use, then enter 1 (laborer). This number is multiplied by the Resource Usage to calculate the total resource usage.
11. Enter the amount of the resource used for this overhead in Resource Usage. For example, if it takes one laborer .25 hours to cleanup MIXER1 after each use, then enter .25.
12. Enter the unit of measure in which this resource is yielded in Resource UOM.
13. Enter the amount of the item yielded in this production process (the item entered in the Item field) during that .25 hours of resource usage in Item Quantity.
14. Enter the unit of measure in which this overhead is measured (for example, pounds) in Item Unit of Measure.