What is overhead rate in SAP CO-OM - Overhead Cost Controlling?

SAP Term: overhead rate

• Component: CO-OM

• Component Name: Overhead Cost Controlling

• Description: The rate at which overhead is allocated to direct costs to charge cost objects with the proportion of the overhead costs attributable to them. This can be a lump sum, percentage, or quantity-based rate. An example of the use of overhead rates is to allocate overhead from material cost centers to orders by debiting the orders in proportion to the material withdrawals and crediting the material cost centers with the same amounts. This is also used to allocate sales and administration overhead.

Smart SAP Assistant

• Key Concepts: 
  Overhead rate is a term used in SAP's CO-OM Overhead Cost Controlling component. It is a rate used to calculate the overhead costs associated with a particular activity or product. The overhead rate is calculated by dividing the total overhead costs by the total activity or product volume. 
  
  How to use it: 
  In SAP, overhead rates are used to calculate the overhead costs associated with a particular activity or product. The overhead rate is calculated by dividing the total overhead costs by the total activity or product volume. This rate can then be used to determine the cost of a particular activity or product. 
  
  Tips & Tricks: 
  When calculating an overhead rate, it is important to ensure that all relevant costs are included in the calculation. This includes both direct and indirect costs, such as labor, materials, and other expenses. Additionally, it is important to ensure that the total activity or product volume is accurate in order to get an accurate overhead rate. 
  
  Related Information: 
  For more information on SAP's CO-OM Overhead Cost Controlling component, please refer to SAP's official documentation here: https://help.sap.com/viewer/product/SAP_CO-OM_OVERHEAD_COST_CONTROLLING/latest/en-US