Landed Cost Types

You must set up the types of costs that you wish to capture in order to use the Clever Landed Cost solution. Use the search tool to find the "Landed Cost Types" screen and create a Landed Cost Type for each cost type that is relevant to the goods that your business purchases.

 

 

For each "Landed Cost Type" you will need to confirm the details that the system requires in order to be able to calculate and post Landed Costs through the system. The first field to populate is the Code, which is simply a unique code to identify each landed cost you wish to use within your business and which you can then assign to relevant Items. The Description field is a way for you to identify each code you have created. It also helps in understanding what each code means. The next field along is the Calculation Type, which defines how the expected cost is calculated for the Landed Cost. Clever Landed Cost provides the following Calculation Types, which are detailed below.

 
Duty Costs will be calculated based on the Duty that is specified for an Item. Duty cannot be used with Fixed Cost Setup.
Volume Costs will be calculated based on the Cubage, as specified in the Item Unit of Measure.
Weight Costs will be calculated based on the Weight, as specified in the Item Unit of Measure.
Per Piece Costs will be calculated based on the Purchase Order Line Quantity (Base Unit of Measure).
Percent Costs will be calculated based on the Purchase Order Line Value.
(blank) No Calculation Type has been chosen yet. While the field is blank, you cannot open the Landed Cost Rules or Fixed Cost Setup for the Landed Cost Type.
 

Once a Landed Cost Type is in use, you cannot change its Calculation Type freely:

  • you cannot change it at all once Item level Landed Cost Rules exist for the type
  • you cannot change it to Duty if Fixed Cost Setup exists for the type
  • you cannot change it to blank if Fixed Cost Setup or Landed Cost Rules exist for the type
 

Alongside assigning a unique Code and Description for each Landed Cost Type you can also select a Category Code for the Landed Cost Type. Landed Cost Categories can be set up to suit the business needs and can be used for reporting purposes. To set up Landed Cost Categories, see the Landed Cost Categories section.

 

Note: the Category Code field is not shown on the "Landed Cost Types" screen by default, so if you wish to use this functionality you will need to use the Business Central Personalize functionality to add the field to the screen.

 

For Landed Cost Types which you incur prior to receiving goods into the Country of Landing, it is normal that the Duty to be paid for the goods will also include such costs. Within Clever Landed Costs this is possible by setting Include in Duty against the required Cost Types. As an example, if Include in Duty is enabled for the Landed Cost Type of Freight, then the duty amount will be calculated as (Item Base Cost + Freight Cost) * Duty %. The Include in Duty field cannot be edited on a Landed Cost Type with a Calculation Type of Duty.

 

Note: because of the above functionality, only one Landed Cost Type should be set up with a Calculation Type of Duty, so that the system adds costs to only the Duty Landed Cost Type.

 

You can also set default values for each Landed Cost Type, but this is not necessary. Depending on the Calculation Type there are different fields used to store the default value, as detailed below. The value specified will be inherited by new Item Landed Costs for the Landed Cost Type.

 
Default Cost Used to set the default cost when the Calculation Type is set to Weight, Volume or Per Piece. This field cannot be edited for the Duty and Percent Calculation Types.
Default Cost % Used to set the default cost when the Calculation Type is set to Percent. This field can be edited only for the Percent Calculation Type.
 

If you change the Calculation Type, any default value that no longer applies is cleared.

When you update the Default Cost (or Default Cost %) you will be prompted to update all Item Landed Costs of this type. Answer yes to recalculate the relevant Item Landed Costs. For Weight and Volume the Cost per Calculation Unit is updated, for Per Piece the Default Cost is updated, and for Percent the Cost % is updated. Only Landed Cost Rules assigned to individual Items are updated.

 

 

Landed Cost Vendor

Use the Landed Cost Vendor No. field to record the default Vendor from whom you expect to receive the invoice for this type of cost. The Landed Cost Vendor Name is filled in automatically from the Vendor and cannot be edited.

The default Vendor is copied to new Landed Cost Rules and Fixed Cost Setup lines for the Landed Cost Type, where you can override it if a particular cost is invoiced by a different Vendor.

 

Cost Treatment

Introduced in Version 5.0.0 of Clever Landed Costs, the Cost Treatment allows you to decide whether you wish to use the Default or Charge Item method for posting costs against Inventory. New Landed Cost Types take their Cost Treatment from the Default Cost Treatment on the Landed Cost Setup screen. Depending on the option you choose, the following information is required to be set up.

 
Default

For each Landed Cost Type you will need to specify an Accrual Account, which will be the G/L Account into which the expected cost will be posted (for the relevant Landed Cost Type) by the system on receipt of the purchase order. Once the cost has been invoiced the expected cost is reversed and the actual costs are posted to the landed cost ledger entries.

You should also have an Inventory Accrual Acc. (Interim) stated on your General Posting Setup for Items that will have landed costs, as this is where the expected costs are posted on receipting the order. Also within the "General Posting Setup" screen, you should set the Overhead Applied Account to the same account as the Inventory Accrual Acc. (Interim). This will ensure the landed costs are posted correctly within the general ledger.

For each Landed Cost Type you will need to specify a Variance Account, which will be used to post any differences between the expected cost (recorded on receipt) and actual costs that are posted for Purchase Receipts when invoicing the Landed Cost.

If you are using Landed Costs for Transfer Orders then the Transfer Variance Account should be specified. This is used for both expected and actual landed cost postings, as Transfer Order postings (as per standard Business Central functionality) are always posted as Actual Costs for inventory costing purposes. The Transfer Variance Account field is shown only when Incoterm Allocation Enabled is switched on in "Landed Cost Setup".

The Accrual Account, Variance Account and Transfer Variance Account fields can be edited only when the Cost Treatment is Default. You can have a separate Accrual Account per Landed Cost Type if you wish to ensure clarity in reporting.
Charge Item

For each Landed Cost Type you must specify the Charge Item No. (an Item Charge) and the Gen. Bus. Posting Group. You cannot save a Landed Cost Type with this Cost Treatment until the Charge Item No. is filled in. The Gen. Bus. Posting Group is filled in from the Default Gen. Bus. Posting Group in "Landed Cost Setup", and you can change it if you need to.

The above combination will be used in line with standard Inventory posting principles to post to the correct accounts for expected and actual costs.

The Charge Item No. and Gen. Bus. Posting Group fields can be edited only when the Cost Treatment is Charge Item.
 

The financial postings that are created for each Cost Treatment method are detailed in the Financial Postings section of this user guide.

When you change the Cost Treatment, the fields that do not apply to the new method are cleared. Changing to Charge Item clears the Accrual Account, Variance Account and Transfer Variance Account. Changing to Default clears the Charge Item No. and Gen. Bus. Posting Group.

You cannot change the Cost Treatment of a Landed Cost Type once any of the following exist for it:

  • Landed Cost Rules
  • Document Landed Costs on a Purchase Order or Transfer Order
  • open receipt Landed Cost Ledger Entries
 

You also cannot change the Charge Item No. while open receipt Landed Cost Ledger Entries exist for the Landed Cost Type.

 

Note: in order for the system to post the expected costs correctly, the Automatic Cost Posting and Expected Cost Posting to G/L fields must be enabled on your "Inventory Setup" screen, otherwise you will not see any landed cost accrual postings.

 

Landed Cost Assignment

From the menu it is possible to view and set up new cost assignments for the Landed Cost Type. For Item related costs, select the Landed Cost Rules action, and for Document/Container based costs use the Fixed Cost Setup action.

 

 

"Landed Cost Rules" are assigned to Items and will be calculated and assigned to each Item on a Purchase Order or Transfer Order based on the Calculation Type and Quantity and/or Cost of the Item.

Default "Fixed Cost Setup" can be assigned to a Document (Purchase/Transfer) or Landed Cost Container and is then apportioned across the received Items, with each receipted Item gaining a share of the cost based on the Calculation Type.

The Landed Cost Rules and Fixed Cost Setup for a Landed Cost Type cannot be used at the same time for the same type of cost. If you have existing Landed Cost Rules in place for a specific cost, you will not be able to open the "Fixed Cost Setup" screen. Similarly, if a cost type has Fixed Cost Setup in place, you cannot then assign "Landed Cost Rules" for the same cost type. Both actions are unavailable while the Calculation Type is blank.

To find out how to set up "Landed Cost Rules" please read the Item Landed Cost Assignment section of the user guide.

To find out how to set up "Fixed Cost Setup" please read the Fixed Cost Assignment section of the user guide.

Note: you cannot delete a Landed Cost Type that has Landed Cost Rules or Fixed Cost Setup. Delete these first.

 

Dimensions

For a "Landed Cost Type" it is also possible to set up the Dimensions that you wish to capture during posting for financial reporting. Select Dimensions from the Related menu.

 

 

The dimensions will be copied into "Document Landed Costs" entries on a "Purchase Order" along with any other dimension inherited from the purchase line.

 

 

During the receipt posting, the "Landed Cost Ledger Entries" are created with the dimension value from the "Document Landed Costs" and the accruals are then posted with the dimensions specified.

On the "Purchase Invoice", the dimensions are added to the purchase line when validating Landed Cost Type Code. Ledger Entries are posted off the back of the cost assignment with the dimensions from the purchase line, and variance postings will be posted with the dimensions from the purchase line.

Dimension values can be viewed on the "Landed Cost Ledger Entries" screen.

 

 

Within the "Landed Cost Journal" we can also view the related Dimensions.