Definitions
Item Charges - used to allocate direct cost to purchases and sales of items. Item charges are useful for:
- Record the added cost in inventory value;
- Identify the landed cost of an item for making more accurate decisions on how to optimize the distribution network.
- Break down the unit cost or unit price of an item for analysis purposes.
- Include purchase allowances into the unit cost and sales allowances into the unit price.
Landed Costs - used to extend the cost price with all kinds of additional costs in the process of purchases and sales. This allows the registration of an item charge that would specifically be attached to a sales or purchase document. This means that all costs related to a purchase may be recorded:
- To estimate total cost of the requirements
- Identify cost (purchase invoices) not received.
- Impact procurement costs on item cost price
As example, Landed Costs include:
- Shipping Costs : Transport costs for moving the goods from a place to another.
- Taxes and Custom Duties;
- Fees and commissions;
- Certification, regulatory compliance and sanitary analysis costs;
- Etc…
Costing method is usually actual costing in case of Landed Costs. By actual costing is refered FIFO or Average costings (specific costing is not supported).
Standard costing is an option, but if the sum of Landed Costs is not included in the standard cost, then it will be treated as a variance.
Tariffs are applicable for a specific Item Charge. This makes handling (to know which tariff is aimed for what) and selection easier (when creating Recurring Cost or manually adding Landed Cost to a document). Currency is used to filter tariffs to be selected. For example, if a vendor is set with USD, only USD tariffs will apply.
Recurring Costs are used to define default Landed Costs to be applicable for specific customer/vendor.