Landing Cost Question

[Former Member]

Hello -

When we add the landing cost it looks like it does not impact the Item Cost. However, does affect the Warehouse cost. Shouldn't it also impact Item Cost?

Thanks,

Mike

[former_member583013 · Accepted solution]

Mike,

When entering the Landed Costs there are effectively 2 steps to it.

Step 1. Selecting the Vendor/s and selecting the Goods Receipt for which the Landing Cost is being applied. In the details tab the pricelist (Last Purchase Price) and expenditure (YES) should be selected. the landed cost document is added

Step 2. Open the Same landed cost document...go to the Journal tab ..click Create JE..Select the Expense Account to post the landed cost to offset the Inventory cost..

This will complete the steps and update the Last Purchase price.

[Former Member · Accepted solution]

Hi Suda -

Thanks for the help. Should we Credit the JE to Product COGS or Expenses? I am thinking Product COGS.

Thanks

Mike

[former_member583013 · Accepted solution]

Mike,

It has to be the expense account and not COGS.

The landing cost adjustment happens through 3 transaction.

Original Inventory Cost per unit $400

One when you create the JE from landed cost

Inventory Dr $100

Expense Cr $100

When you get the AP Invoice from the Vendor / when you go to pay for the expense for which you are creating the landed cost

you will

Expense Dr $100

Vendor Cr $100

Since the Inventory Cost has already increased due the JE you first created...when you create the Delivery

COGS Dr.........$500

Inventory Cr .......$500

The increase in COGS happen automatically..therefore you should select an expense account in the landed cost JE

Suda

[Former Member · Accepted solution]

Hi Suda --

What if we don't use AP in SAP -- we issue payment for invoices separately. In this case, how would we incorporate the landing cost in our items? Would we then apply to COGS or still Expenses?

Thanks!

Mike

[former_member583013 · Accepted solution]

Please explain what you mean by NOT USE AP? How are you proposing to do this then?

There are basically 2 types of costs. One is internal costs which do not involve a vendor and need not paid for and the other is external cost like custom duties, charges, shipping charges which have to be paid out.

Please explain what in reality these exps are?

[Former Member · Accepted solution]

Hi Suda --

In our past accounting system, we did not use the AP module. So, when we started using SAP, we were under the impression that we could bypass the AP Invoice module and continue to pay vendors (mfg, brokers) separately from SAP. Therefore, we have not learned how to use AP Invoice.

The expenses we are trying to include in our Item Cost are the broker fees -- shipping, custom, etc - outside of FOB. Is there a way to include this without using AP Invoice?

Thanks!

Mike

[Former Member · Accepted solution]

Mike,

Without AP in place of B1, you will probably face more and more problems in the future not only this one. ERP is a complete business process management system. It is better to incorporate AP in your B1 implementation so that you may get less headache in the log run.

My 2 cents.

Thanks,

Gordon

[former_member583013 · Accepted solution]

Yes ofcourse, there is a way to add them to the Item Cost but accounting wise you need to be careful as you cannot increase the Item Cost which will affect your COGS and also record these as expenses in any form.

This would result in double booking of expenses which is not legally correct.

When you enter the AP Invoice ..at the row level you have 3 freight columns which can be enables from the Form settings.

You can enter upto 3 additional cost to roll into the cost of the item by using these freight columns.

Processing AP outside the system does not serve the purpose of using the system. I would suggest you change you process to what best for the business and not continue to work the way your old software let you to..

[jitin_chawla]

Hi Mike,

There is a Landed Cost Documentation available on the service Market Place, path as follows:

Channel Partner Portal -> Solutions -> SAP Business One -.> Support -> Additonal info -> Online support -> documentation resource centre

You can check that as a knowledge meterial for Landed Costs and it has examples of JE as well.

Regards,

Jitin