Allocating Landing Costs and Expenses

How to Setup Transactions for Landing Costs

1. Navigate to Transaction Types (e.g. Main Menu > Setup > Transactions > Transaction Types (tab).

2. Click Edit (button) on the top row if it is not greyed out.

3. Click a transaction type on the left.

4. On the right, scroll down to the Accounting section.

5. Click the field next to Landing Costs and select one of these options:

   • Allocate from: Apply this setting to transactions from which costs are paid (e.g. Bank Payments, Purchase Orders or Supplier Invoices).

     • Note: Be careful that you do not duplicate the cost (e.g. if you are allocating costs from a Purchase Order, you do not need this setting on Supplier Invoices).

   • Allocate to: Apply this setting to transactions from which goods are received (e.g. Goods Received).

6. Click Save (button).

How to Capture Landing Costs

Step 1: Capture the landing costs

• Create an expense or purchase order account and capture the landing costs.

• Debit the accrual account you use for your inventory transactions and credit the supplier or bank account whichever is applicable.

Step 2: Select the landing cost transaction

• If your setup is as follows: Purchase Order > Goods Received > Supplier Invoice: 

  • Create a Purchase Order.

  • When the goods as per the purchase order are received, copy the Purchase Order to a Goods Received transaction.

  • Allocate landing costs to the Goods Received transaction (See How to Allocate Landing Costs from a Transaction below). The inventory cost prices are increased to reflect the landing costs.

  • Copy the Goods Received transaction to a Supplier Invoice. The landing costs are not copied across, only the prices as per the purchase order.

How to Allocate Landing Costs from a Transaction

1. Edit or create a Goods Received (as an example).

2. Click Actions (button) >Allocate Landing Costs.

3. Click the transaction on the list of transactions that includes the landing cost.

4. Click Next (button).

5. Select the items from the transaction that you want to allocate. By default, all the items are checked. Uncheck the items you want to remove.

6. Click Next (button).

7. Select the items on the Goods Received you want to allocate the landing costs to. By default, all the items are checked, and the costs are apportioned pro-rata. If you uncheck some items, the allocated costs are automatically adjusted.

8. Click Allocate (button).

9. A panel is displayed on the right with the landing costs. Landing costs are also shown in the Landing Cost column next to the item. (Use the Field Chooser (*) in the first column to display the Landing Cost column.)

10. The Per Unit Cost on the transaction is adjusted to include the allocated landing costs. 

How to Clear Landing Costs

1. Edit a Goods Received transaction (as an example).

2. Click Actions (button) > Clear Landing Costs.

3. Confirm that you want to clear the landing costs on the popup.

4. The Unit Cost on the transaction is adjusted to exclude the allocated landing costs. The entries in the Landing Cost column are cleared. 

How to Allocate Expenses to Production

An expense can be allocated to one or more transactions. The full amount of the expense can be allocated or only part thereof. 

Transactions can be edited to allocate the outstanding portion at a later stage. However, the transaction must be in an editable status (or changed back to an editable status) to do so.

1. Record an Expense as you normally would. For example:

   1. Navigate to the Ledger (e.g. Main Menu > Accounting > Ledger).

   2. Click New (button) > Expenses.

   3. Reference = Type a reference for the transaction.

   4. Expenses (Dr) = Select an expense account (e.g. Cost of Sales).  

      • Note: The Debit Account depends on how you record inventory transactions.

        •  For example, if you post all your purchases to an accrual account and clear it monthly to inventory or cost of sales, you could post this expense to the same accrual account. In this case you would journal the Expenses from the Cost of Sales Report as you would the other costs. 

        • Alternatively, you could post the expense directly to cost of sales and exclude the Expenses column on the Cost of Sales Report from your month-end journals.

   5. Bank (Cr) = Select the bank account from which the expense was paid.

   6. Amount = Type the amount paid.

   7. VAT = Select the applicable VAT Type.

      • Note:  Expenses might not include VAT if they are paid to an international shipping company or consist of levies and duties that are a different type of tax. 

   8. Inc / Exc = Select inclusive (Inc) or exclusive (Exc).

2. On the item section, overtype the Description (usually displays Default) with the reference field. This description displays on the popup, therefore, it is helpful to have a better description than Default.

3. Right-click an entry in the item section and select Allocate Expense from the context menu.

4. A popup provides an interface to select the transaction to allocate the expense to. Complete it as follows:

   1. Transaction = Select a transaction from the dropdown list. The dropdown list contains Sales Order transactions.

   2. Click Add Allocation (button).

   3. On the added entry overtype the amount in the Allocated column that applies to that transaction. 

   4. Repeat Steps 1 to 3 to allocate part of the expense to additional transactions.

   5. Click Save (button) if it is not greyed out.

   6. Click Close (Button).

5. Complete the transaction as you normally would (e.g. by setting the Status to Active or Complete).

How to View Expenses on a Cost of Sales Report

1. Navigate to Cost of Sales (e.g. Main Menu > Reports > Cost of Sales).

2. Select SO from the dropdown list that shows WO / SO on the top row.

3. Type the applicable Sales Order number in the adjacent search block (the SO that the expenses were allocated to).

4. Click View (button).

5. The costs' section displays five fields:

   1. Stock Issued: Picked up from linked Goods Issued transactions.

   2. Stock Returned: Picked up from linked Goods Returned transactions.

   3. Purchases: Picked up from linked Purchase Orders.

   4. Services: Picked up from linked Timekeeping Records.

   5. Expenses: The expenses that were allocated to the Sales Order by following the steps explained under: How to Allocate Expenses to Production. 

      • Note: When landing costs are selected from inside a transaction, the unit costs are adjusted, and the landing costs are not shown separately on the Cost of Sales report (i.e. the expenses are included in the Goods Issued column).