Landed cost calculation based on different Split Method
Let's take one example and check different split method and Stock valuation.
When Sales UoM and Purchase UoM same(When Purchase UoM Different keep in mind landed cost always calculate based on Purchase UoM and inventory valuation always display in Sales UoM).
Configuration
To work with Landed Cost first need to activate landed cost feature, to do go to Inventory > Configuration > Settings.
Now we need to configure Product Category to define Costing method.
Products
Wooden Table => Cost : 100, Weight : 5, Volume : 2, Category : Wooden
Wooden Chair => Cost : 200, Weight : 8, Volume : 8, Category : Wooden
Purchase Order
Wooden Table => with Qty : 1, cost : 100
Wooden Chair => with qty : 2, cost : 200
Landed cost Type
Transportation => Cost: 20
Duties => Cost: 15
Result with Different Split methods in Landed cost
1. Equal :
Transportation = 20 / (no. of products 2) = 10
Duties = 15 / (no. of products 2) = 7.5
Valuation :
Wooden Table => 100 + Transportation(10) + Duties(7.5) = 117.5
Wooden Chair => 200 * qty(2) + Transportation(10) + Duties(7.5) = 417.5
2. By Quantity :
Allocate cost based on qty, here we have wooden table with qty 1 and wooden chair with qty 2 so we have to allocate cost among 1:2 ratio.
Transportation = 20
So, For Wooden Table = (20 * 1)/3 = 6.67
For Wooden Chair = (20 * 2)/3 = 13.33
Duties = 15
So, For Wooden Table = (15 * 1)/3 = 5
For Wooden Chair = (15 * 2)/3 = 10
Valuation :
Wooden Table => 100 + Transportation(6.67) + Duties(5) = 111.67
Wooden Chair => 200 * Qty(2) + Transportation(13.33) + Duties(10) = 423.33
3. By Current Cost :
Allocate cost based on products cost 100:400 ratio (1:4).
Wooden Table Cost: 100 *1 (qty)
Wooden Chair cost : 200 *2 (qty)
Transportation = 20
So, For Wooden Table = (20 *1)/ 5 = 4
For Wooden Chair = (20 * 4)/5 = 16
Duties = 15
So, For Wooden Table = (15 *1)/ 5 = 3
For Wooden Chair = (15 * 4)/5 = 12
Valuation :
Wooden Table => 100 + Transportation(4) + Duties(3) = 107
Wooden Chair => 200 * Qty(2) + Transportation(16) + Duties(12) = 428
4. By Weight :
Wooden Table = 5 weight and Wooden Chair = 8 weight.
So the ratio 5:8 but here for chair we have 2 qty so ratio 5:(8*2) => 5: 16
Transportation = 20 allocate based on weight of products.
So, For Wooden Table = (20 *5)/ 21 = 4.76
For Wooden Chair = (20 * 16)/21 = 15.24
Duties = 15
So, For Wooden Table = (15 *5)/21 = 3.57
For Wooden Chair = (15 *16)/21 = 11.43
Valuation :
Wooden Table => 100 + Transportation(4.76) + Duties(3.57) = 108.35
Wooden Chair => 200 * Qty(2) + Transportation(15.24) + Duties(11.43) = 426.65
5. By Volume :
Wooden Table = 2 Volume and Wooden Chair = 8 Volume.
So the ratio 2:8
Transportation = 20 allocate based on Volume of products.
So, For Wooden Table = (20 *2)/ 10 = 4
For Wooden Chair = (20 * 8)/ 10 = 16
Duties = 15
So, For Wooden Table = (15 *2)/10 = 3
For Wooden Chair = (15 *8)/10 = 12
Valuation :
Wooden Table => 100 + Transportation(4) + Duties(3) = 107
Wooden Chair => 200 * Qty(2) + Transportation(16) + Duties(12) = 428
To check valuation of products first validate Landed cost and go to Inventory > Reports > Inventory Valuation.
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