Landed Cost Procedure
Landed cost will allow you to add cost from different vendors to an item that is received. To do this we need to create the landed cost ID and then add the cost id to a landed cost Group. Here is an example of creating a landed cost for sales tax.
Here you will create cost id’s that will span all the sales tax jurisdictions you collect for. Select the vendor that matches the cost id you are creating. Next you will select the cost calculation method for this cost id. In this example a percentage of the cost of each item is used. Enter in the sales tax percentage for this cost. The two check boxes should be checked. This allows this cost to be added to
the inventory cost at the time of matching invoices to shipments received. The tolerance percentage is if you don’t want inventory revalued unless this percentage is greater than this value. Leaving it at zero will revalue inventory (recommended). Enter in your gl accounts for accrued purchases and purchase price variance.
Landed Cost Group
After creating the Cost ID you must enter it into a group. The purpose of the group is if you have multiple landed cost id’s that are assigned to purchase orders. In our example there will be one group for each cost id. See below:
Create the Group ID and then in the grid click on the lookup next to Landed Cost ID and select your sales tax. Click Save.
Entering Landed Cost on a Purchase Order
To now use the landed cost we must assign it to lines on your purchase order.
As you add lines to your purchase order you can drill in to the details. See the marked area.
While highlighted on the line click the blue arrow and the following window will open.
Note the area for the selection of the landed cost. Press the lookup button and select your tax needed that will be applied to the item. Save your purchase order and you are ready to receive.
When performing a shipment receipt, you will see the following screen. Please note the landed cost field displaying the percentage that we setup in the beginning. At this point the inventory cost is going to reflect the cost plus the landed cost. Also the general ledger will show accrued purchases account at the enter/match invoice process being credited and inventory debited.
Below is the screen shot when entering a matching invoice. The original step of receiving against the main vendor does not change. Select the vendor and click Auto – Invoice and select the PO and line items you want to receive. After you post that transaction you then enter another invoice. In our example we select the sales tax vendor. Not the circle on the column associated with LC (landed cost). Check that box. Then go to the lookup on item number. Note the circle. This will bring up the lookup table on the right. Select your sales tax landed cost group.
When completed and posted a invoice will be in AP for this vendor and if the cost and landed cost are different they inventory will be revalued and an additional general ledger entry will be made to inventory (or purchase price variance depending on setup).
That completes the landed cost setup and processing.