Allocating Freight Costs by Item for Inbound Transactions
You can include inbound freight costs as part of the cost of the item. The system allocates freight costs on a percentage of the total weight or volume of a shipment. When you allocate inbound freight costs at the item level, the system updates the Item Cost File (F4105) and Item Ledger File (F4111) tables with allocated freight costs for inbound shipments. You can allocate freight costs by item for inbound shipments only when the freight terms are collect and only after you have received the purchase order. You must set the appropriate processing option to allocate inbound freight costs by item.
This example illustrates how the system allocates inbound freight by item:
Item |
Quantity / Weight |
Percent of Total Weight |
Amount by Item |
|---|---|---|---|
Item A |
100 / 50 |
25 |
3.13 (25 percent of 12.50) |
Item B |
50 / 60 |
30 |
3.75 (30 percent of 12.50) |
Item C |
10 / 90 |
45 |
5.62 (45 percent of 12.50) |
Total |
200 |
N/A |
12.50 |
As illustrated, the freight is allocated by the total weight by item. Then, each piece is allocated its corresponding proportion of the freight cost. Each piece from the table would be allocated these freight costs:
Item A: 3.13 ÷ 100 pieces = 0.0313
Item B: 3.74 ÷ 50 pieces = 0.075
Item C: 5.62 ÷ 10 pieces = 0.562