Controlling (CO)

Allocates overhead to direct costs, to enable the objects of cost accounting to be charged with the proportion of the overhead attributable to them. Can be a lump sum, percentage, or quantity-based rate.

For example, overhead rates are used 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.

Also used to allocate sales and administration overhead.