Introduction

This guide explains how to allocate an overhead cost invoice - such as a freight bill - to one or more purchase orders (POs) in TRAEDE. This ensures that the cost is properly added to your inventory value and reflected in accounting. It is a continuation of the guide on how to create an overhead cost invoice.

 

Prerequisite

Before proceeding, make sure you have already created and booked an overhead cost invoice. If not, refer to the previous article on how to create one.

 

Steps to allocate the overhead cost invoice

1. Open the overhead cost invoice

   • Go to Production > Overhead cost invoices.

   • Click the invoice you want to allocate.
     
     
     
     
     
      

2. Add a new allocation

   • Click Add new allocation.

   • A new section will open where you can allocate a portion of the invoice to a specific PO delivery.
     
     
     

3. Enter allocation details

   • PO delivery number: Enter the delivery number of the PO you want to allocate costs to.

   • Amount to allocate: Enter how much of the overhead cost invoice to allocate to this PO.

     • You can split one invoice across multiple POs (e.g., 1000 DKK to PO1, 500 DKK to PO2).

   • Distribution method: Choose how the cost should be spread across the PO items:

     • Quantity: Distributes cost based on the number of items.

     • Value: Based on item cost price.

     • Weight: Based on item weight (useful if your freight cost is weight-based).
       
       
        

💡 You can set a default distribution method in your Production Settings.

4. Save and process allocation

   • Click Save to complete the allocation.

   • TRAEDE will update the inventory values of the products involved.

   • Wait until the status turns green to ensure the update has been processed.

Inventory and accounting impact

• Inventory update: Product unit costs are updated. For example, from 745 DKK to 753 DKK per unit.

• Cost of goods sold (COGS): TRAEDE also updates the COGS on any invoices for the products that were sold after receiving them.

• Accounting entries:

  • The value is moved from the deferred freight account to the inventory account.

  • An entry is created showing the overhead invoice number, PO number, and allocated amount.

📘 Example:
"Overhead cost invoice 1002 has now been allocated to PO7114-1 – 1500 DKK."

Summary

Allocating overhead cost invoices allows you to properly reflect third-party costs (e.g., freight) in your product inventory and financial records. You can distribute costs across multiple POs and use various methods based on your business needs. Once allocated, both your inventory and accounting will reflect the updated values.