Landed cost calculations

---

Bookmarks: Purchase order fulfilled awaiting bill | Local currency purchase orders | Foreign currency purchase orders

---

Laned cost calculation returns purchase order products with total costs that include prorated landed fees. A landed cost calculation can be set up as soon as a purchase order is created or at any time before the goods are received.

Related website page: https://www.zeablue.com/landedcostcalculation

 

Calculation methods

There are three methods that can be used to work out the items pro-rata costs:

1. By value, percentage of the total value on base currency (all currency amounts will have exchange rates for the conversion)
2. By product weight, percentage of the total weight
3. By product volume, percentage of the total weight

For methods 2 & 3 to work well, each product should have weight & volume defined.

When viewing a landed cost calculation, click on the 'Preview items' button to view a list of items and identify those products with or without weights and volumes.

 

Calculation id

A calculation is a record that holds the landed cost bills and fees for one or more purchase orders to be costed.

When all of the linked purchase orders have been received in full, the calculation can be posted and the following updates take place:

1. the entered supplier bills will be created
2. the entered fees will be posted
3. the linked purchase orders will be posted
4. commit product quantities receipt from "Received awaiting bill" into inventory on hand (see below)
5. distribute the total fees value onto each product item based on the chosen calculation method

There are three ways to create a new calculation:

1. when viewing a purchase order, click Setup landed costs
   
    
2. when receiving a local currency purchase order, click Enter landed costs and bills
   
   note, the "Automatically create a bill after receive" option will not be available for foreign currency orders. This is because these orders will be available for landed cost calculation when bills are confirmed.
    
3. use the "Landed cost calculations" menu item from the Purchases menu

 

Purchase order fulfilled awaiting bill

This occurs when a purchase order is fully received but does not generate a bill at the time of receipt.

The system flags the purchase order as fulfilled and places the received inventory quantities in a virtual inwards area rather than directly into inventory on hand. The benefit of this is that it calculates the exact landed costs of each product, resulting in the correct cost of goods sold for each sales invoice.

Here is an example of the process flow:

A. purchase order created, the ordered quantities are recognised as Incoming:

 

B. receiving the purchase order in full and create a bill later, the quantities are shifted from Incoming into Received awaiting bill:

Note if the order is partly received with the "Automatically create a bill after receive" option not ticked, it remains partfulfilled until it is received in full before landed cost calculations.
 

C. this order can now be found on the "Received awaiting bill" menu item inside Purchases. Click on an order to create a bill:

Create bill takes you to the Landed cost calculation page, where you can enter and post supplier bills and fees.
If there were any errors in the quantities received, the Undo receive button returns the order status to Confirmed, allowing the order to be received with the correct quantities.

 

D. after the landed cost calculation is posted, the quantities are shifted from "Received awaiting bill" to inventory on hand:

 

Hint: when entering supplier bills, you can match the total bill amount by editing the order's line items. To do this:

1. click on Edit item prices icon
   
2. check each line item and if the price is wrong, click on the sku code to edit
3. make the correction and then click Save item
4. the total order value (in the supplier's currency) is displayed at the top left hand side of the screen, for example:
   

 

 

Local currency purchase orders

Landed cost calculations can also be configured for purchase orders sourced from local suppliers. The freight or shipping component costs, for example, can be distributed among the product items.

The process is similar to that of a foreign currency order, and it is outlined above.

When a local currency order is received, the option "Automatically create a bill after receipt" is enabled and checked by default. This is a faster way to receive and finalise orders in local currency.

If a landed cost calculation is configured for the local order, the bills and fees will be costed at the same time.

Note, if there are more than one orders entered against the same calculation, then this order can't be received with a bill at the same bill. If this happens, the option "Automatically create a bill after receive" is unticked, and to finalise this order, use the Landed cost calculations page to post it.

Hint: for the shipping cost field on the purchase order edit page, this is not the same as the landed cost fees and it will not be prorated onto the product items.

 

Foreign currency purchase orders

When receiving a foreign currency order, the option "Automatically create a bill after receive" will not be available. These orders will be put into "Received awaiting bill" automatically after they are received.

To finalise the costing, go to the Landed cost calculations page.

When everything checks out, it can be posted by clicking on the "Post bills & purchases" button:

Only the Pro-rata subtotal amounts will be used to calculate the landed fees for each product line item.

For the non pro-rata subtotals, these fees will be created with their own bills.

Hint: for supplier bills & fees with the same supplier, date, reference, currency, rate & tax type will be posted and combined into the same bill.

For example:

 

Preview items

This page shows the detailed breakdown of the landed charges and fees calculated for each product line.

For the Qty column, there are three qty display modes:

• If any of the POs has no qty received, then the "Qty ordered" is to be used for calculation
• If any of the POs has some qty received and awaiting to be costed, then the qty received is used and its heading will be set "Qty to be billed"
• if any of the POs has qty received and waiting for more stock to arrive, the "Qty remaining" is used

For example: