Related overhead costs (SAP Business One)

Related overhead costs All costs that a company spends in addition to the purchase price to provide a product in-house, such as transportation, insurance, customs duties and fees, are included in the item costs in SAP Business One. Technically speaking, these costs are also called overhead costs, in the English system interface called Landed Costs.

Business administration background

The entry price of a product is determined by the purchase price plus the related costs. Because these costs are specifically incurred for the purchase of the merchandise, the company accounts for them when receiving the goods (activation). Therefore, they do not count as other operating costs. Therefore, a product with the same purchase price costs more when the company purchases it in Tokyo instead of Munich.

Illustration in SAP Business One

SAP Business One calculates the item costs in purchasing from the purchase price and additional expenses. In purchase invoices, the field „Freight“ contains the sum of the additional expenses for an invoice. A click on the orange arrow opens the „Freight Costs“ window. There, the user enters the freight amount for the entire invoice as a net or gross amount. The freight types, their properties, and the billing accounts are set by the company under Administration • Definition • General • Freight. If the „Last Purchase Price“ checkbox is activated there, the freight costs are also included in the „Last Purchase Price“ price list.

An example illustrates the effect when evaluating by moving average: 20 laptops at 200 EUR each are in stock. Ten more laptops come from another supplier with freight included, and the company calculates the freight as part of the item costs. SAP Business One divides the total item costs by the total quantity in stock and calculates 203.33 EUR per laptop. When delivering these items, these item costs are included in the gross profit calculation.

The document types in SAP Business One also include a document called „goods disposal prices“. This topic has implications for accounting and the valuation of items.