The Cost Treatment you assign during "Landed Cost Type" setup will control the financial postings made when posting receipts (Purchase/Transfer) and invoices associated to Landed Costs.
Charge Item
This method builds on standard Business Central Item Charge functionality to allow landed costs to flow through inventory and will offer the best ability for true margin analysis accounting.
If you want landed costs to update inventory valuation and cost of goods sold through the Item Ledger Entries within Business Central's Inventory Costing module, then you should use the Charge Item method.
Default
The costs posted using this method will use the Overhead Rate to absorb expected costs into inventory, with simple accrual and variance accounts set up against the Landed Cost Type to hold accruals and post any actual variances realised when invoices are processed for the Landed Cost Type.
This is often more suited to simpler scenarios and Standard Costing Inventory where variance accounting is already in place.
Cost Treatment Comparison
| Feature | Default Cost Treatment | Charge Item Cost Treatment |
| Easy Setup | Yes | Uses standard Business Central Posting Configuration |
| Uses Business Central Item Charge Behaviour | No | Yes |
| Updates Actual Inventory Valuation for FIFO Items | No | Yes |
| Updates COGS for FIFO Items | No | Yes |
| Posts clear variance accounts | Yes | Yes, depending on Item Costing Method |
| Can be used for Fixed Costs | No | Yes |
| Best for simple landed cost accrual/variance posting | Yes | No |
| Best for true landed cost margin reporting | No | Yes |
Note: choose the Cost Treatment before you start using a Landed Cost Type. The Cost Treatment cannot be changed once Landed Cost Rules, Document Landed Costs or open Landed Cost Ledger Entries exist for the Landed Cost Type. Changing a Landed Cost Type to Charge Item also clears its Accrual Account, Variance Account and Transfer Variance Account.