Creating a Landed Cost Item
To count a charge on a vendor bill as a landed cost, you must select an item on the bill. If you enter a bill that is not associated with an inventory item, you must associate it with a landed cost item you create. An example of a landed cost item is the item “Freight.”
For example, you use a freight company to deliver inventory items you need. For each shipment, you receive two separate bills. One from the vendor that charges you for the items. One from the freight company that charges you only for transporting the items.
When entering the bill, you must select an item to associate the freight expense as a landed cost. Since the freight bill is not associated with an inventory item, you must create a landed cost item record for Freight.
When creating landed cost items, note the following:
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Landed Cost items should be named appropriately based on the type of charge, such as landed cost categories like Insurance and Handling.
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The expense account noted should match the corresponding landed cost category or be a contra account shown in the same section of the Income Statement. Ultimately, this expense account is zeroed due to the following General Ledger impact:
PO Receipt:
CR – Expense Account – The value in the landed cost category
Separate Vendor Bill:
DB – Expense Account or Contra – Amount received from carrier for freight costs
To create a landed cost item:
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Go to Lists > Accounting > Items.
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Click the item type you want to create to track the landed cost.
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In the Item Name/Number field, enter a unique name for the landed cost expense, such as Freight.
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On the Accounting subtab, in the Expense Account field, select the account on which you want to record freight and other such charges.
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To fill out additional details on the item record, see Creating Item Records.
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Click Save.
When you create a bill, you can select the landed cost item and track the expense on the bill as a landed cost.