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Landed Costs | DEAR Inventory 101

Calculating Landed Costs
The landed costs can be a collection of costs attributed to a product in DEAR Inventory. More often than not, this cost occurs at a separate interval to when the stock has been paid for, or even delivered.

Landed costs still contribute to the overall cost of the products and but can be distributed evenly in order for accurate future margin calculation.

Landed Cost Example:
We have a PO that has been received in full and the invoice has been paid.

No additional costs were available, or they were not entered before the invoice was settled. However, the costs need to be applied to the product for accurate margin calculation when sold. In order to assign the cost from the delivery/duty charges etc to the order, a manual journal will need to be created. Go to the Manual Journaltab and click the manual journal button below.

The reasoning behind this is the bill will normally come from a 3rd party provider or a company not associated with the same company that sent the goods (supplier). From the drop down menu under the Debit, you must choose the account that the cost will be assigned against. Normally it is the same inventory account in which the product itself is assigned to. The Credit account will usually be the freight/duty costs expense account and will distributed across the cost of the inventory on this Order.

When entering the reference it is best to record a note that is directly related to the costs for future reference. As the original bill will be paid in Xero, the amount recorded in DEAR will be the pre-tax amount.

Once the manual journal has been authorised it will show up in the log and attributes section of the order under the transactions tab.

To check the cost of the products for the particular PO have been distributed evenly across all items in the order, go to Reports > Purchase Cost Analysis. You can filter to find the PO you were recording against and see the separation of costs according to product.

Finally, here’s a helpful introductory video from our friends at DEAR.

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