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Landed Cost Overview

A landed cost is the total price of a product once it has arrived at a buyer's door. The landed cost includes the original price of the product, transportation fees (both inland and ocean), customs, duties, taxes, insurance, currency conversion, crating, handling and payment fees.

Landed cost has historically been managed in xTuple using user-defined costing element0,s which were manually allocated to an item's actual cost when distributing voucher costs to the item. The obvious problems with this approach were 1) the assumption that all costs would be included on the vendor voucher and 2) the need to manually calculate and distribute parts of the voucher to the various costing elements. If you had multiple items on a voucher, you had to decide (and calculate) how the freight and other non-item costs were to be distributed to each item.

With the release of xTuple 4.11, landed cost handling has been significantly improved. There are now two means with which to attribute freight and other costs to items.

Simple Freight Distribution

When entering a voucher, it is now possible to automatically distribute the cost of freight to the costing elements of the items received on the voucher. Freight is entered at the header level, the cost element is chosen to post to, then the method to calculate the freight distribution is chosen. The distribution method can be one of the quantity of items, the value of items on the voucher, or distributed based on total weight of the items. Once distributed, user cost elements entries are populated on each of the relevant line items.

Multi-Vendor Distribution

Not all import costs of the item come from the one vendor’s voucher. Many times the item costs will be entered from the vendor voucher, but other landed costs might come in from other vendors such as freight costs, or duty from governing agencies. These would be entered as separate vouchers. With 4.11 xTuple gives you the ability to post these costs back to the original items, instead of an account or expense category.

When entering a subsequent voucher that forms part of item landed costs, you now have the option to distribute that cost back to the items received on the original voucher, thus updating those items landed cost.  Again, the calculation is done automatically based on quantity, value or weight of the items.

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