What is overhead rate in SAP SRD-FIN-COR - FIN-Cost and Revenue?

SAP Term: overhead rate

• Component: SRD-FIN-COR

• Component Name: FIN-Cost and Revenue

• Description: A set of parameters that control how overhead is allocated from cost centers to cost objects, including the percentage rate, the type of overhead, and the allocation base. Any number of overhead rates can be defined for different purposes and assigned to overhead rules, where they are applied to production lots, sales and service orders, and projects to allocate overhead costs to those objects from the indirect cost pools.

Smart SAP Assistant

• Key Concepts: 
  An overhead rate is a cost that is applied to a product or service to cover indirect costs. It is calculated by dividing the total overhead costs by the total production or service volume. This rate is then used to allocate the overhead costs to each product or service. In SAP, overhead rates are used in cost and revenue accounting to calculate the cost of goods sold (COGS) and the cost of services rendered (COSR). 
  
  How to use it: 
  In SAP, overhead rates are used in cost and revenue accounting to calculate the cost of goods sold (COGS) and the cost of services rendered (COSR). To set up an overhead rate, you must first define a cost element group and assign it to an overhead rate type. Then, you must define an overhead rate structure that contains the cost elements and their respective rates. Finally, you must assign the overhead rate structure to a controlling area. 
  
  Tips & Tricks: 
  When setting up an overhead rate, it is important to consider how often the rate will need to be updated. If the rate will need to be updated frequently, it may be beneficial to set up multiple overhead rate structures with different expiration dates. This will allow you to easily update the rates without having to recreate the entire structure each time. 
  
  Related Information: 
  For more information on setting up an overhead rate in SAP, please refer to SAP Help documentation on Cost and Revenue Accounting - Cost Accounting - Overhead Rates.