Landed Costs- Allocation By Weight.
When trying to allocate landed cost by weight the Freight(FC) column which shows the bifurcation of cost amongst individual items distributes the cost in a manner which is difficult to understand.
e.g. If the landed cost is $50
There are two items as follows:
Item 1: Qty 50 , Weight 75 kg
Item 2: Qty 20, Weight 20 kg
The Per unit bifurcation of the cost in the "Freight (FC)" column is shown as 0.79 for Item 1 and 0.53 for Item 2.
Logically, the total cost should be divided by the Total weight and then priority should be given to the item weighing the highest....
However, this is not what is happening.... Instead $50/95 kgs= 0.5263 or 0.53 is the costing apportioned to the lowest weighing item
Can you please explain?