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