Example: Site A Standard Cost to Site B Standard Cost, Freight, Cost Markup
This topic provides a costing example.
In this example, Site A in Columbus transfers product to Site B in Columbus. Freight is involved, so Site B will have a cost markup. Assume that the standard cost at Site B is $1.10, and that the standard cost at Site A is $1.00.
Although both sites are in Columbus, the company has contracted with a freight company to move product. The company has established the cost markup amount(s) for freight and loaded them in the Item Costs form. Paperwork is not required.
At time of inventory transfer, assume a landed cost freight charge of $0.05. This is the amount set up for landed cost for the product.
| Site A Journal Entries | Credit | Debit |
|---|---|---|
| IntraEntity Clearing (Site A) | $1.00 | |
| Inv Materials | $0.50 | |
| Inv Labor | $0.15 | |
| Inv Fixed Ovhd | $0.20 | |
| Variable Ovhd | $0.15 | |
| Outside Serv | $0.00 |
| Site B Journal Entries | Credit | Debit |
|---|---|---|
| Inv Materials | $0.55 | |
| Inv Labor | $0.25 | |
| Inv Fixed Ovhd | $0.20 | |
| Variable Ovhd | $0.10 | |
| Outside Serv | $0.00 | |
| InterEntity Val. Var. | $0.10 | |
| IntraEntity Clearing | $1.00 | |
| Freight Expense | $0.05 | |
| Duty Expense | $0.00 | |
| Brokerage Expense | $0.00 | |
| InterEntity Val. Var. | $0.05 |