Landed costs are the total costs involved in landing a shipment of goods. Landed costs not only take into account the purchase cost of the goods but also additional costs like freight, tax levies, insurance etc. Landed costs are the total costs of the entire shipment. All costs involved in the shipment need to be accounted for. This will give you more accurate reporting and better cashflow management. Landed costs will be distributed among the line items in the procurement.
Adding landed costs to purchase orders:
To add landed costs when receiving goods on a purchase order:
- Select Add Landed Costs on the bottom left hand side of the Purchase Order.
- Click on Add Landed Costs below the items in the purchase order.
- Add the Landed cost name, the costs incurred, as well as the tax rate if applicable
You may add landed costs at any point during the purchase order workflow until the order has been partially or fully received.
Applying landed costs:
You may apply a specific or all landed costs to a shipment by selecting the landed cost(s) line item(s) and clicking on receive (or receive all).
Congratulations, your products’ landed costs have now been factored in! Landed costs (extra costs) are distributed by a weighted value.
- Calculate the total landed cost (add all separate landed costs in PO)
- Calculate the total line items cost = sum of (qty*cost) for each line item
- Calculate the dollar value ratio = Line Item Cost / Total Line Items Cost
- Calculate the total landed cost for line item = Dollar Value Ratio * Total Landed Cost
- Calculate the landed cost per quantity for a line item = total landed cost for line item / qty