Scenario:

• Assume the items are imported by air, or by ferry, and then lorry driver send the items to warehouse, in between, it could be involved in freight, insurance, unloading costs and transportation from the port to the destination. All these charges are landing cost and you should update in purchase price.  Without update landing cost in purchase price, you find that the item profit is higher because it is not included the landing cost.

Solution:

To include Landing Cost in Purchase Price, you are required this Module: Landing Cost.

• To see the function, go to Purchases | Landing Costs
• There are 4 landing cost options to show your landing cost in purchase price.

Enable the costs and do below entries:

Step 1 - Go to Purchase Invoices – 4 landing cost’s columns will be visible.

Step 2 - Create an item LC1 and LC2.

– Issue Purchase Invoice: LC1 10 Qty – Unit cost RM10, LC2 20 Qty – Unit cost RM20

Landing Cost

Step 3 - The Landing Cost Calculator menu action will be activated.

Step 4 - Click Landing Cost Calculator.

1. Input the value of the 4 landing costs.
2. “Proportion by” will retrieve the default value from the setting. Remain as “Value” for this scenario.
3. Click “Ok” button. System will auto calculate the cost for each item.

Calculation for proportion by “Value”:

Custom Duty for LC1      = (Subtotal LC1 / Total Amount) * Total Custom Duty

=  (RM100 / RM500) * RM10

= RM2

Step 5 - Go to Inquiry | Stock Inquiry. Select item LC1 and press inquiry. System will show item unit cost as RM12.00 (notice that the landing cost in Purchase Price already).

Unit Cost for LC1      = (Custom Duty + Insurance + Freight Charges + Local Charges) / Qty + Unit Price

= (RM2 + RM4 + RM6 + RM8) / 10 + RM10

= RM12.00

Step 6 - Go to Reports | Stock Reports | Month End Stock Balance. Preview for both items LC1 and LC2. System will show item landing cost in purchase price

Landing Cost for “Weight”/ “Volume” proportional method.

Step 1 - Create an item LC3 with Weight 2 and Volume 4. LC4 with Weight 1 and Volume 2.

– Issue Purchase Invoice: LC3 2 Qty – Unit cost RM10, LC4 2 Qty – Unit cost RM10

Step 2 - Click Landing Cost Calculator.

1. Input the value of the 4 landing costs.
2. “Proportion by” will retrieve the default value from the setting. Change it to “Weight” for this scenario.
3. Click “Ok” button. System will auto calculate the cost for each item.
4. And finally, system will calculate Landing Cost in purchase price as well

Calculation:

Custom Duty for LC3       = (Qty * Weight) / Total(Qty * Weight) * Total Custom Duty

= (2*2)/((2*2)+(2*1))*RM10

[LC3]  [LC4]

=  4/6*RM10

=RM 6.67

• Same calculation for Volume proportional method.
• For manual proportional method, no calculation involved. Whatever value user input will be reflected to each landing cost columns.

Landing Cost in Foreign Currency

- Enable the foreign currency option in landing cost settings.

Step 1 -   Issue a Purchase Invoice as below:

Step 2 - Go to Inquiry | Stock Inquiry. Select item LC1 and press inquiry.

Unit Cost    = (Unit Price * Rate) + (Custom Duty / Qty * Rate) + (Insurance / Qty * Rate)

+ (Freight Charges / Qty * Rate) + (Local Charges / Qty * Rate)

=(10*3.8)+(10/1*3.8)+(20/1*3.8)+(30/1*3.8)+(40/1*3.8)

=38+38+76+114+152

= RM 418.00