Landed Costs
Add freight, duty and other costs of bringing stock in to the cost of the items on a purchase order.
The real cost of imported or delivered stock includes freight, customs duty, insurance and handling, not only the supplier's price. Purchases → Landed Costs spreads those extra costs over the items on a purchase order, so stock value and cost of sales are right.
How it works
- The supplier's goods are on a purchase order with stock items on the lines.
- You create a landed cost allocation for that PO with the extra costs.
- Allocate adds each item's share to its inventory cost and posts debit Inventory, credit Landed Costs Clearing (
2160). - When the freight forwarder's or customs bill arrives, code it to Landed Costs Clearing (
2160) so the clearing account comes back to zero.
Create an allocation
- On Purchases → Landed Costs, click New Allocation.
- Enter a Name (for example Shipping costs for PO-00001).
- Enter the Purchase Order ID. Allocation needs a purchase order; Bill ID is for reference only.
- Choose the Allocation Method.
- Under Cost Components, add each cost with a Description (for example Freight charges) and Amount.
- Save, then click Allocate on the row.
The form asks for the purchase order's internal ID, not its PO number. You can copy it from the address bar when the PO is open (the part after /purchases/orders/).
Allocation methods
| Method | How the cost is shared |
|---|---|
| By Value | In proportion to each line's value |
| By Quantity | In proportion to each line's quantity |
| By Weight, Manual | Currently shared by value, the same as By Value |
Lines without a stock item still take a share of the cost but do not change any inventory value.
Example
You order 100 units of item A at R10 and 50 units of item B at R20 (R1,000 each). Freight of R300 is allocated By Value:
- Item A gets R150, so its landed unit cost is R11.50.
- Item B gets R150, so its landed unit cost is R23.00.
For items costed by FIFO, the extra cost is spread across the open stock layers so later sales use the landed cost.