The Landed Cost Process

The Landed Cost process is a method of apportioning additional costs for inventory over an item or a range of items. Transaction lines for items of the type 'charge' are apportioned over transaction lines for items of the type 'goods'. For example:

Goods item A: Purchase Cost = 400 GBP

Goods item B: Purchase Cost = 200 GBP

Charge item (freight): Purchase Cost = 100 GBP.

The freight charge is to be apportioned over the two goods items as follows:

Goods item A: Purchase Cost = 400 GBP + 40 GBP = 440 GBP

Goods item B: Purchase Cost = 200 GBP + 20 GBP = 220 GBP

Expense the organization incurs = 30 GBP.

The remaining 10 GBP may be suspended because the user is unsure if it is to be apportioned over item A, B or left as an expense that the organization incurs.