Table of contents
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Overview
The landed costing screen is used to enter all the costs that are related to items that are arriving from overseas that you are allowed to add to the value of the item.
There are two stages used because actual costs are often not known until after the products have been receipted into store. Refer to the flow diagram for more details.Landed costing adds costs incurred in getting the stock into store to the price paid for the stock and updates the average cost in the system.
There are two stages
- Estimated stage = costs are estimated and the product . The PO can be reciepted receipted and the average cost adjusted using of the stock will use the estimated costs
- Actual stage = actual costs are compared with the costs used in the estimate stage and the average costs are then adjusted to suit.
Note you can use Manage Shipments incoming to track the containers arriving and count by container.
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to use Landed costing configurations are required |
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Set the Purchase Order
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Set the flag
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to use Landed Costing
Create a Landed Cost Estimate - one for each PO
- Select purchase order that will require landed cost adjustment
- Provide a name
Entering the Charges
- Enter Type of charge
- Charges are setup at Administration > configuration > Lookups > "ChargeType"
- enter Method of apportioning the charge
- By weight will look at the weight of each item and allocate by weight and is useful for shipping or air freight that is charged by weight
- By Dollar value uses the dollar value on the purchase order
- By volume uses the article volume
- Manual enables you to manually allocate the charges across all related lines
- Description - add a note to so you can remember what this charge was intended to cover
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Action Button: Calculate and show Apportions
Review calculations
Manual values need to be entered in the grid - the remainder will show until you have allocated all the expected cost
Each line will show the purchase order value, the landed costs being added and the final cost ea. This will then be used to update the average cost
New Average cost = (current average cost * current stock qty + qty from the PO * final cost ea) / (current stock qty + PO stock Qty)
Set the Estimate Ready to Use
When you have completed the estimate then Action Button: Set Estimate Ready to use
Receiving Stock - no changes to standard process
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Stock can only be received if the Landed Cost Estimate has been set to "Ready to Use" |
Receive stock as normal
- The system will use the calculated average cost for stock value journals - see Purchase Order for Perishable Goods from PO to Goods Receipt
- The Journals created are at the bottom of this page
Landed Cost Estimate recalculates based on actual counts before stock journals created
When the stock is counted the landed cost allocation is updated and recalculated before the Stock Journals are created
- If less stock than was expected is counted during receipt - then the average cost of all items will increase
- If more stock than than was expected is counted during receipt - then the average cost of all items will decrease
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Note: The $ of the stock placed into Assets will be greater than the amount to be paid to the stock supplier. The balance is placed into a clearing account (see Maintain GL Control ) until later cleared out when the actual payments/ invoices are linked to the landed cost calculation Once product is receipted the estimated calculations have been used and cannot be changed. |
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If you do not update the estimate with actuals you will have a balance in the GL Control Account "Landed Cost Clearing Account" |
From the Purchase Order for Perishable Goods from PO to Goods Receipt - open the estimate
Select
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an invoice to link to and select the line/s on the invoice to use - allocate the amounts to use
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Add additional cost lines if required |
How an invoice becomes available in the list of landed cost invoices
The list of invoices is filtered by (1) those against a GL account flagged as a Landed Cost Account that have not yet been associated with a landed cost
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Action Button: Calculate Actual Average costs
Review calculations and adjust manual allocations in the grid
Use status when ready to apply
- Application will then compare the estimated landed costs with the actual landed costs
Where changes are to be made
- The average cost of the article will be adjusted to the new average cost
- Journals will be written including clearing out any balance in the clearing account
- The status will then move to Actual used.
Landed costing diagram of the flow.
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