We are a distributor so purchase all of our product. We use a material burden percentage by part to cover import and freight costs. We recently changed from Standard costing to average costing and believed that using the material burden percentage on the part would handle this for us ok. If the PO is $1 and the burden is 10% then the average cost material is $1 and the material burden cost is $0.10 (a simplification). We’re finding that the burden percentage calculations are coming out wrong and are nothing like this (although sometimes they are ok)
Does anyone know what the actual calculation being done is? Anyone have any idea why this isn't working especially on established product