Landed Costs Setup
Last updated
Last updated
The following setup is required before the application can be utilized:
General Ledger accounts are required to be created to ensure accurate postings to the general ledger.
For each landed cost category utilized, three accounts should be setup, being
Other Current Liability Account
COGS Account
Variance Account
This account is used on the following master data records:
Landed Cost Category
Service Item
When an Item Receipt is processed and a Landed Cost is applied, this account is credited. For example, if an Item Receipt is created, and two Landed Costs are Applied (Customs and Transportation):
The following GL Impact will occur:
When the Vendor Bill is then processed for the Landed Costs, this account is debited.
The following GL Impact will occur:
This account is used when posting variances for landed costs to the COGS account. Examples provided here.
This account is used when posting variances for landed costs to the variance account. Examples provided here.
It is recommended to use Summary Accounts in the General Ledger. For example
Landed cost categories identify the expense account costs are posted to when the category is selected. For each landed cost type that will be tracked, a landed cost category is required to be setup.
Below an example of a cost category for 'LC - Transport' using the same account defined above
Landed Cost Items are used to include additional charges on purchases orders and vendor bills as separate line items. For example, you use a transport company to deliver items you need. Two bills are received:
One from the vendor that charges you for the items.
One from the transport company that charges you only for transporting the items.
When entering the bill for transport, you must select an item to associate the transport expense as a landed cost. Since the transport bill is not associated with an inventory item, you must create a landed cost item record for transport.
Changes to be made to existing vendor records is limited. On vendor level the Cost PO creation Method is to be determined. The Cost PO Creation Method defines the standard procedure for generating Purchase Orders (POs) for costs associated with this particular vendor. This setting determines the default value on Cost Budget / Transaction Cost records but can be changed as required.
No Cost PO
This option indicates that no Purchase Order will be created. This is typically used for internal costs.
Create Individual Cost PO
This option indicates that a new Purchase Order will be created specifically for this cost.
Create Grouped Cost PO
This option indicates that the costs will be grouped together with other costs for the same entity on a Purchase Order .
Add to Source Transaction
This option indicates that the costs will be added to the Source Transaction, merging the costs into a single transaction.
Add to existing PO
This option indicates that the landed cost should be added to any existing (Cost/Source) Purchase Order. If selected, the Purchase Order must also be selected .
The Cost PO Creation methods application hierarchy is as follows.
Tracking Landed Costs for items being purchased must be enabled on Item level. To activate Tracking of Landed Cost set the Item field "Track Landed Cost" to Yes.
Once setup has been completed, landed cost budgets can now be created.
If you continue to experience issues after following this guide, we recommend reaching out for further assistance.
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