Overhead costs on raw materials

Our requirement is to have some percentage overhead on raw materials.  So I created a costing sheet and applied a percentage to them and did a std cost estimate. Now when GR is received it valuates against the std cost (which includes OH) and posts the difference to PPV. Client wants it to valuate against the orginal price of material (without OH)
Ex;  ROH  Mat A $1.00 in planned price 1
       Costing sheet : 10% OH
Standard cost of this ROH A is $1.10
Purchase order will be at $1 so GR will post  Dr. Inv $1.10  Cr. Gr/Ir $1.00 PPV $ 0.10
But clients want that PO price $1 to be valuated against $1 (true ROH cost) and post $0.10 to absorption account
Dr. inv $1.10, Cr Gr/IR $1  Cr abs $0.10  
if P.O is $1.10 then Dr. Inv $1.10 Cr. Gr/IR $1.10 Dr.PPV $0.10 Cr ABS $0.10
I am not sure if it is even possible if not waht options do I have to have and overhead for Raw materials with out updating standard cost estimate with $1.10.
Thanks

Hi
Yes, it is possible
What you want is to Debit the inventory with 1.1 i.e. inclusive of Overhead.. But, Credit the GR/IR with 1 $ and post the 0.10 to absorption account instead of PPV... So, that PPV reflects true PPV
You need to create an accrual key for the same..
1. Create an accrual condition type and accrual account key in MM pricing procedure. In this way, there is a credit entry to the GL account represented by accrual account key. Hence the PPV represents the true value.
2. For the accrual condition type, you can create a condition record such that its value is same as your overhead. You can use the user exit to automatically populate its value from KEKO and KEPH table.
Refer this post where it was discussed a few days back
Product Costing-Overhead inclusion in Inventory standard cost without PPV
Regards
Ajay M

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