In Process: Overview: Landed Costs
Goods received from certain locations may incur landed costs, such as import duties, broker, trailer, freight, and storage fees -- fees that are in addition to the item's purchase order cost. Landed costs can be tracked and included in items' actual and average costs.
This topic has these subtopics:
Landed Cost Setup
Standard Landed Costs
Actual Landed Costs
Landed Cost Setup
Before you start using landed costs, you will need to do the following:
Accounts payable and purchasing must be interfaced (i.e., AP interfaced to purchasing? selected).
Confirm the labels of up to four types of landed costs (e.g., freight, storage, etc.) that you want to track (i.e., Landed cost type 1 - 4)
Review the Accrue landed costs? option that enables estimated landed costs (i.e., a percentage of the purchase price) to be accrued when goods are received.
Set up landed cost codes in Landed Cost Codes Maintenance (TMM).
If you opted to accrue landed costs, you will need to set up landed cost accrual (LCST ACCR) and landed cost variance accounts (LCST VAR) in Posting Criteria Maintenance (XPC).
When you receive an item that is subject to actual landed costs, landed costs for the item are calculated (based on the percentages in Landed Cost Codes Maintenance): the landed cost variance account is debited; the landed cost accrual account is credited. When invoices for the landed costs associated with the item are subsequently entered and updated, the landed cost accrual account is debited by the calculated amount and the difference is posted to the landed cost variance account.
Standard Landed Costs
If you use standard landed costs, method to track landed costs, the system includes landed costs (i.e., as a percentage of the item's unit cost) in an item's cost when the invoice is updated in accounts payable.
When you enter the invoice for the goods received in AP Invoice Entry (NE), the system adds the fixed percentage associated with each landed cost to the invoiced cost.
You must set up landed cost codes with fixed percentages for each in Landed Cost Codes Maintenance (TMM).
For items that are subject to standard landed costs, select a landed cost code for each landed cost field in Vendor Price Maintenance (VMM).
If you use the standard cost method to track landed costs, the system includes standard landed costs in an item's cost when the invoice is updated in accounts payable. You must set up landed cost codes and establish a cost percent for each in the Landed Cost Codes Maintenance (TMM). For items from specific vendors that are subject to landed costs, select a landed cost code for each landed cost field in Vendor Price Maintenance (VMM).
The system uses the Cost % field for the landed cost code in Landed Cost Codes Maintenance to calculate the actual cost. When you use the AP Invoice Entry (NE) program to enter the invoice for the goods received, the system adds this fixed percentage to the invoiced cost, affecting the item's actual cost:
Current actual cost = Invoiced unit cost + (Invoiced unit cost x Landed cost percent)
For example, if the invoiced cost is 7.00 and landed cost is 2%, current actual is 7.14: 7.00 + (7.00 x .02) = 7.14
Actual Landed Costs
If you use the actual cost method to track landed costs, the system adds the actual landed costs to the item's actual cost when all invoices for a receipt have been entered in AP Invoice Entry (NE) and you have run Landed Cost Update (NLCU) for the receiver.
To track actual landed costs, enter the landed cost codes that apply to the item and vendor in the Vendor Price Maintenance (VMM) program and select Use actual landed costs.
When the goods are received, the receiving programs update the item’s actual cost (viewed in ICM/ICQ):
If you use the actual cost method to track landed costs, the system adds the actual landed costs to the item's actual cost when all invoices for a receipt have been entered in AP Invoice Entry (NE) and you have run Landed Cost Update (NLCU) for the receiver.
To track actual landed costs, enter the landed cost codes that apply to the item and vendor in the Vendor Price Maintenance (VMM) program and select Use actual landed costs.
When the goods are received, the receiving programs update the item’s actual cost (viewed in ICM/ICQ):
Actual cost = PO cost
Average cost = [(Quantity on hand x Current average cost) + (PO unit cost x Quantity received] / (Quantity on hand + Quantity received)
If you have opted to accrue the landed costs at the time of receipt, the PO Receipt Register (VRJ) will also calculate and post the percentages set up in Landed Cost Codes Maintenance (TMM) for each code that applies to this vendor/item to landed cost accrual account(s) set in Posting Criteria Maintenance (XPC).
When the invoice from the vendor who supplied the goods is received, it is entered in AP Invoice Entry (NE) and tied to the receiver/PO line on which the goods were received. The invoice is entered like a normal material or labor invoice for a purchase order.
When the invoices for the landed costs are received from the appropriate vendors/handlers, they are entered in AP Invoice Entry (NE) and the operator selects the type of invoice as L (Landed cost) and enters the landed cost type that applies to this invoice (e.g., landed cost code FR for freight). The program displays open receivers where this landed cost is applicable and prompts for selection of the receiver to which this invoice applies.
If you opted to accrue landed costs when the receiving register was posted, the AP Invoice Register will post an offsetting entry for the amounts that were accrued, and post the difference between the accrued amount and the actual amount to the landed cost variance account(s).
From here down is accrued -- yes???
If you have opted to accrue the landed costs at the time of receipt, the PO Receipt Register (VRJ) will also calculate and post the percentages set up in Landed Cost Codes Maintenance (TMM) for each code that applies to this vendor/item to landed cost accrual account(s) set in Posting Criteria Maintenance (XPC).
When the invoice from the vendor who supplied the goods is received, it is entered in AP Invoice Entry (NE) and tied to the receiver/PO line on which the goods were received. The invoice is entered like a normal material or labor invoice for a purchase order.
When the invoices for the landed costs are received from the appropriate vendors/handlers, they are entered in AP Invoice Entry (NE) and the operator selects the type of invoice as L (Landed cost) and enters the landed cost type that applies to this invoice (e.g., landed cost code FR for freight). The program displays open receivers where this landed cost is applicable and prompts for selection of the receiver to which this invoice applies.
If you opted to accrue landed costs when the receiving register was posted, the AP Invoice Register will post an offsetting entry for the amounts that were accrued, and post the difference between the accrued amount and the actual amount to the landed cost variance account(s).
Note
The system accumulates and stores landed costs in your base currency. You
can enter invoices from a vendor in that vendor's currency; however, ??? you??? must
convert landed costs to your base currency.
When you have received all applicable invoices for a purchase, run the Landed Cost Update program to have the system update the item’s cost.
Current actual cost = Invoiced cost + (Total actual landed cost / Quantity received)
Average cost = [((Quantity on hand - Quantity received) x Current average cost) + (Quantity received x Current actual cost)] / Quantity on hand