Using Landed Cost in Dynamics GP

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Landed costs are all the costs related to purchasing an item which include additional costs beyond the purchase price of an item. Your business could potentially have multiple types of additional costs.  Some typical examples of landed costs are freight, customs, duty, insurance, unloading fees and security surcharges.  If you import goods from overseas you are likely dealing with multiple costs to "land" product at your facility.  However, landed cost does not only apply to international companies or purchases. Dynamics GP has Landed Cost functionality built into most versions including GP Perpetual, Advanced Management and Business Essentials licensing.

Normally, the additional costs would have been expensed immediately, but now they are being included in the inventory asset value. Landed cost provides the full picture of the cost of an item thereby providing a more accurate margin on an item.  If the items you purchase incur significant costs to get to your warehouse, it is important to have an effective process for tracking landed cost.

What is the Dynamics GP process to handle landed costs?

GP Purchase Order Processing (POP) facilitates managing landed cost. If you are already using POP for GP, the process should feel very similar with a few small additions.  The landed cost process in GP will add on a step during PO receiving to assign landed costs to the PO receipt.  Also, you can enter and match multiple landed cost invoices.

Before you can start using the landed cost process in POP you need to setup landed cost ID's in inventory. You can also use landed cost groups to create a collection of landed costs ID but a group is not a requirement.

Navigate to Inventory > Cards > Landed Cost to create a landed cost ID. Below is an example of a landed cost ID for Canadian Air Freight.  An important thing to point out is that the vendor ID assigned to the landed cost ID is the vendor you expect to receive the additional cost invoice from (Example:  UPS).


Now after adding landed cost ID's to GP you can assign to a receiving document in POP.

Adding landed cost to a receiving document:

Now that you have a landed cost ID, you can add additional cost to the purchase receipt transaction. On the receivings landed cost apportionment screen you can assign one of multiple landed costs ID.  The apportionment method from the landed cost ID will calculate the distribution of the additional costs to the line items.

From the example below the following distribution would be calculated:

Item 128 SDRAM

$87.29 Insurance = $100 Additional Cost * ($927.15 / $1,062.15)

$174.58 Freight-US = $200 Additional Cost * ($927.15 / $1,062.15)

Item 24X IDE

$12.71 Insurance = $100 Additional Cost * ($135 / $1,062.15)

$25.42 Freight-US = $200 Additional Cost * ($927.15 / $1,062.15)


Invoicing Landed Costs:

When the invoice comes in from the landed cost vendor you will enter it in POP. The main difference between a normal POP invoice and a landed cost invoice is that you can select the 'LC' checkbox in the detail grid to select landed costs to invoice instead of items.  After you select the landed cost to invoice you can match the landed cost to a shipment.

In the example below, the invoice came in from the freight vendor at $250 instead of the $200 I expected. GP can recognize the variance and post and adjustment to revalue the inventory item from the PO receipt.



by Software Solutions Group



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