- Purchase 100 widgets @ $20/each
- Overseas shipping costs are $1500
- Customs, Duties, and other Processing Fees are $500
- Domestic shipping costs are $400
The situation changes though, if I am using landed costs. Using the same costs above, I would value my inventory at $4400 dollars in total, or 100 widgets at $44/each. Perhaps a more accurate picture of the inventory value? In turn, this increased cost will affect my Cost of Goods Sold on the sales side, impacting my margin appropriately.
So, now that we have an example, how about talking through how Landed Costs work in Dynamics GP? With Landed Costs in Dynamics GP, these costs can be:
- Recorded as an estimate amount on a receipt
- Matched to an invoice and revalued to provide a more accurate amount
- Landed Cost Setup: Includes setup of individual landed costs, landed cost groups, and assignment to item/site combinations
- Purchase Order Landed Cost: Assigning landed cost groups to POs
- Receivings Landed Cost: Recording of landed cost groups on Receipts
- Receivings Landed Cost Apportionment: Apportionment of landed costs across an entire receipt
- Invoicing Landed Cost: Recording invoices for landed cost vendors and matching them back to the original product receipts
You can also select a cost calculation method, this will be how the landed cost estimate on the receipt will be calculated. If you have chosen to match invoices, the invoice amount will be compared against the original estimate on the receipt. The resulting difference can be revalued, if Revalue Inventory for Cost Variance is marked. Otherwise, the difference will post to the Purchase Price Variance account.
The GL account specified are used in the following manner:
- Accrued Purchase Account: Used as the offset to the landed cost estimate on receipts, and cleared when the amount is invoiced or matched to invoice.
- Purchase Price Variance Account: Used for the variance between invoice and receipt when matching invoices but not revaluing.
Cards>>Inventory>>Landed Cost Groups
- A specific location
- Certain items
- A type of shipping process
This step is not required. However, if appropriate, you can assign a landed cost group to a specific item/site combination in this window. Doing this will cause the landed cost group to default on the purchase order line item, where it can be changed if necessary.
More soon on the transaction side of all of this fun!