How to use Landed Cost when Using In-Transit Warehouse to Receive on Water Inventory

What assumptions are there in this process?

  • Manage Inventory Cost by Warehouse = YES (Note:  When inventory cost is managed by warehouse, the  Landed Cost does not catch up and increase               inventory cost when inventory has been transferred to other warehouses)
  • Inventory is received into a IT Warehouse upon GRPO (Shipping term is FOB Shipping Point where ownership is transferred when inventory is shipped by Vendor)
  • Landed Cost can be estimated and accrued at point of GRPO
  • Inventory Transfer is created upon actual receipt of inventory from IT into the regular warehouse

How the process works

1. Set up Landed Cost Allocation Account in the Landed Costs – Setup Window 

Landed Cost SAP Business One

2.  After creating the GRPO into the In Transit Warehouse, copy it to a Landed Cost based on the accrued freight amounts.  GRPO and Landed Cost must have the same date and enter the Freight company in the Broker field in the Landed Cost transaction.

SAP B1 Landed Cost
SAP B1 Landed Cost
SAP B1 Landed Cost
SAP B1 Landed Cost

3. Upon physical receipt of inventory, create the Inventory Transfer.  The cost of the inventory upon transfer will include the allocated Landed Cost

SAP B1 Landed Cost

4. When AP Invoice is created for the actual Freight amount, copy from the Landed Cost (based on accrued amount).  Enter in separate lines the variance from the accrued amounts and directly charge the respective Freight COGS Accounts for each Landed cost item.  

SAP B1 Landed Cost
SAP B1 Landed Cost
SAP B1 Landed Cost

5. If there is a need to revaluate On Hand inventory based on the variance, use the same Freight COGS Account in the Inventory Revaluation transaction to reallocate to the FG Inventory GL Account. 

SAP B1 Landed Cost
SAP B1 Landed Cost

If you would like to explore SAP Business One, then contact us to discuss your needs.

At Seidor we sell, install, implement, train, and support our customers for SAP Business One from our offices in Houston, Detroit, New Jersey, Miami, and California.

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