Overview
Landed cost is used when the purchase cost of goods includes more than the supplier invoice alone. It helps spread additional cost such as freight, customs, or handling across the relevant items.
Main purposeReflect the real delivered cost of purchased goods.
Important areasSource document selection, extra-cost definition, allocation review, and cost update control.
Business valueMore accurate inventory cost and stronger profitability analysis.
Where To Find It
Common Path: Vendors & Purchases > Landed Cost
Users normally apply landed cost after the main purchase document is known and the extra cost amount is available.
Note: Your company should apply landed-cost rules consistently so inventory valuation remains comparable over time.
How It Works
The screen takes an extra purchasing cost and allocates it to the related items according to the business method used by the company. The goal is to improve the cost basis of the inventory.
- Use landed cost only when the extra charge should become part of inventory cost.
- Review the source purchase carefully before allocation.
- Apply the same allocation logic consistently across similar purchases.
Main Areas
| Area | What It Is Used For |
|---|---|
| Source Purchase Selection | Choose the purchase document or goods receiving basis. |
| Extra Cost Entry | Enter the additional amount such as freight or duty. |
| Allocation Review | Review how the extra cost is spread across items. |
| Cost Control | Confirm the final effect before posting the result. |
Important Fields And Controls
| Field Or Control | What It Means | When To Use It |
|---|---|---|
| Source Document | The purchase basis that will receive the extra cost. | Select the correct transaction before allocation. |
| Extra Cost Amount | The additional cost to be distributed. | Use the real amount that should affect inventory cost. |
| Allocation Method | The business method used to spread the amount. | Use the company-approved costing approach. |
| Affected Items | The items receiving the allocated amount. | Review them carefully before final posting. |
| Resulting Cost | The final cost impact after allocation. | Check it to confirm the effect is reasonable. |
Recommended Workflow
- Open Landed Cost and choose the relevant purchase basis.
- Enter the extra cost that should become part of item cost.
- Review the allocation result across the affected items.
- Confirm the result only after the spread looks reasonable.
- Use related reports or item review to confirm the updated cost effect if needed.
Best Practice
- Use landed cost only for genuine additional acquisition cost.
- Apply a consistent allocation method across similar cases.
- Review the affected items before posting to avoid cost distortion.