1. Landed Cost Based On Purchase Price of an Item

Below there are scenarios implemented in DEAR.

1. Scenario #1 - freight is charged by vendor. On purchase invoice page there is a section 'Additional Cost' where you can record freight.
2. Scenario #2 - freight is paid separately and distributed to the cost later. On purchase task page there is a separate tab 'Manual Journals' where you can record any additional charges not included in the current invoice. Original invoice from second supplier is entered separately and reported as usual AP invoice.

If Scenario #2 is what you need you will follow two steps below:


1. All invoices  (services and goods) are entered separately and exported to Xero as individual invoices. This way you have all information in Xero exactly as per original invoice from suppliers.

2. Additional costs are added to the invoice as Manual Journals and exported to Xero as manual journals as well. Manual Journals tab is available for both Purchase and Sale invoices after 'main' invoice is authorised. The Manual Journals data is used to amend landed cost for purchase and cost of goods sold for sale.

In both scenarios additional cost is distributed based on the cost of the items not their quantity/weight. In our example:
  If 5 units of A = 250$, and 2 units of B = 450$, and 3 units of C = 300$ and the cost of freight for the order $100 will be distributed as following:

1. Total invoice (250$ +  450$ + 300$) = $1000

2. landing cost of A= 250$ + $100/1000$*250$ = $275
3. landing cost of B= 450$ + $100/1000$*450$ = $495

4. landing cost of C= 300$ + $100/1000$*300$ = $330

How to adjust landing cost by freight and other costs

Your scenario is very likely should be implemented via several steps.

a. Create and process purchase order from overseas supplier

b. Process Invoice from Freight Company added as ‘service invoice’.  There might be scenario when GST not equal 10% and GST equal 10%
c. Adjust stock landing cost with additional costs

1. Your purchase order 

2. Your invoice

3. Freight company invoice with GST = 10%

4. Freight company invoice with GST != 10% 

5. Check Xero balance sheet. It will show correct GST transactions from both invoices:

6. Adjust landing cost by additional charges. Open original purchase order/invoice from overseas supplier and add manual journal.

7. Check Xero balance sheet. It shows that that your  SOH = $1100

8. Drill down to see what is included. Cost of goods received $1000 and freight cost $100

2. Landing Cost Based on Various Parameters

DEAR allocates expenses to inventory items based on the initial purchase price of the item. Sometimes there is a need to allocate expenses bases on other parameters - like weight, for example.

One procedure that we would recommend to use for our clients that have some special requirements to cost allocation is as follows:

1. Create an expense clearing account in the accounting system

2. Sync with DEAR

3. Create a service inventory item like this:

4. When creating a purchase invoice for all associated costs (including costs of items, shipping, alcohol taxes) - add them as additional costs:

5. Calculate the cost of the items in a spreadsheet and add inventory as an adjustment using the same clearing account: