In this Document

APPLIES TO:

GOAL

Material Overhead is earned by an item whenever the following transactions take place: 
· PO Receipt Transactions 
· Inter Organization Receipt 
· Assembly Completion 

A functionality is needed to override the above behaviour.

SOLUTION

A flexibility has been provided to the above behavior through Release 11i Discrete Manufacturing Family Pack H. 

Features 
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The Material Overhead (MOH) rules engine offers the following: 
1. Provides the ability to override the default MOH absorption for PO Receipt, Assembly Completion/Return and Inter-Organization transfer for Average/FIFO and LIFO Costing Organizations. 
2. Provides ability to override the default MOH absorption for PO Receipt and Inter-Organization transfer transactions for Standard Costing Organizations. Option to override MOH absorption will not be provided in the case of Assembly Completion transactions in Standard Costing organizations. 
3. Rules are specified such that Material Overhead can either be earned at the default rate or not earned at all. 
4. At the time of costing transactions, the cost processor calls an API to determine if the transaction will earn Material Overhead. 

A new form titled “Material Overhead Absorption Rules” has been created to define the overriding rules for material overhead absorption. 
Form Name: CSTFDOHR.fmb 
Navigation: Cost > Setup > Sub-Elements > Material Overhead Absorption Rules 

The rules defined in the form will be saved to the CST_MATERIAL_OVHD_RULES table. When the cost processor costs transactions, it will call an API to determine MOH absorption rules. The API will determine if Material Overhead will be absorbed for the transaction, based on the rules specified in the ‘Material Overhead Absorption Rules’ form for the particular organization. 

Material Overhead Absorption Rules form provides the following functionality: 

· The user can define rules against which MOH will be earned. Each row in the form defines a new rule. 
· The user can define new rules, update and delete existing rules using this form. 
· If no rules are specified then the default absorption rules are used. 
· If the ‘Earn Material Overhead’ checkbox is unchecked for a rule, then no material overhead will be earned by a transaction defined by that rule. 
· The MOH rules used to override PO Delivery Adjustment and PO Receipt transactions are also used if a Return to Vendor transaction takes place.
· Separate rules can be defined for different types of Inter-org transfers. 
· Rules can defined for Assembly Completion and return transactions in average costing organizations. 
. A particular transaction set can be satisfied by more than one rule. For e.g., if rules are defined as follows:
   i) For PO Receipt of Buy items Earn MOH 
  ii) For PO Receipt and All item do not Earn MOH 

The more specific rules will be applied before a general rule. 
Currently rules are supported for not earning material overhead for assembly completion transactions in Average Costing Organizations. 
It is not supported for Standard Costing Organizations because this causes this Level Material Overhead to be reflected in Purchase Price Variance, which is not desirable. 

Note: No support will be provided for material overhead absorption to be overridden in assembly completion transactions in standard costing organizations