...
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
| Note |
|---|
Purchasing JIT items is a special case of landed cost
|
A simple view of what is going on
...
| Note |
|---|
to use Landed costing configurations are required
|
...
- 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
- Foreign currency and conversion rate if required
- Description - add a note to so you can remember what this charge was intended to cover
View the Estimated charges by Purchase Order Line
...
New Average cost = (current average cost * current stock qty + qty from the PO * final cost ea) / (current stock qty + PO stock Qty)
Supplier direct to customer (Drop Ship Purchase orders)
Where the supplier is sending direct to a customer a Sales Order lines is marked as Supplier Direct to Customer and on Authorise this creates a PO to the supplier with final address at the customer.
Where the PO has a Complex Landed Cost - the value of the final landed costs in the Sales Order currency is shown for clarity on margin in the sales order currency
Set the Estimate Ready to Use
...
| Note |
|---|
If you do not update the estimate with actuals you will have a balance in the GL Control Account "Landed Cost Clearing Account" Shipping Organisations may pay GST - to enter a 100% GST line on the journal - Choose TAX type of 100% Puts entire amount entered to Tax Column
|
From the Purchase Order from PO to Goods Receipt - open the estimate
...
| Gliffy | ||||
|---|---|---|---|---|
|
Accounting Journals
| Journals for receipt of Stock item with locked estimate | Debit | Credit | Estimate of $20 costs |
|---|---|---|---|
| Stock on Hand - assets | 120 | Increase in stock value | |
| Trade Creditors Liabilities | 100 | Amount paid to stock supplier | |
| Landed cost clearing account - liabilities | 20 | Total allocated other costs for these items based on the estimate | |
| Totals | 120 | 120 | |
| Stock Supplier Invoice | Dr | Cr | Payment to supplier for stock |
| Trade Creditors - Liabilities | 100 | ||
| Goods Received not Invoiced | 100 | ||
| Total | 100 | 100 | |
| CR Invoice Journal for a cost paid (customs) = must be linked to landed cost clearing account | Dr | Cr | Payment of $25 costs |
| Trade Creditors - Liabilities | 25 | ||
| Landed cost clearing account | 25 | ||
| Totals | 25 | 25 | |
| Once a journal line is linked to a landed cost account | |||
| Adjustment journal required once actuals are associated | Dr | Cr | Adjustment of stock from $20 estimate to $25 Actual |
| Landed Cost Expenses To Stock - Expense Account | 25 | Expense account tracking landed costs in separate account | |
| Landed cost clearing account - liabilities | 20 | Clear the clearing account of the estimate value | |
| Stock on Hand - Assets - Credit | 5 | Update the stock on hand with the increase (Decrease) in value required | |
| Totals | 25 | 25 | Result = Stock increases $5 (now $25 more than paid to stock supplier) and Landed Cost Clearing account = 0 Landed cost expense account = Actual = $25 |
| Adjustment Journal if Actuals are used prior to stock receipt | Dr | Cr | When $25 actuals are known prior to receipt of stock |
| Stock on Hand - assets | 125 | Increase in stock value | |
| Trade Creditors Liabilities | 100 | Amount to be paid to stock supplier | |
| Landed cost expenses to stock - expense account | 25 | Expense account tracking landed costs in separate account | |
| Totals | 125 | 125 | Result = Stock increases $25 more than paid to stock supplier Landed cost expense account = Actual = $25 |
GL Control Accounts for Landed Costing
...
GL Account configuration to show invoices in landed cost Actuals list
Landed Cost Audit
Landed cost calculations are complex and it is important that the actual cost update reflects accurately the journaled amount. Because the average cost of a SKU is to two decimal places (as required by COGS journals) there is commonly a rounding difference.
