The price on the supplier invoice is rarely the true cost of the item. Landed cost lets you allocate the additional costs of getting goods into your store across the items on the purchase document.
What to include
- Freight and transport.
- Customs duty and clearing charges.
- Insurance in transit.
- Handling and loading.
How allocation works
Additional costs are entered against the purchase document and allocated across its lines. The allocated amount increases the item cost, so the value of stock on hand and the cost of goods sold both reflect what you actually paid to have the goods available to sell.
Cost of goods sold
Every stock-backed sale — a retail line, a dish, a minibar item — routes cost out of inventory into cost of goods sold at the point of sale, using the COGS route configured for that item. This is why the stock posting setup gate blocks selling stock-backed items before the route is mapped.
Checking it
Use the landed cost report to see the allocation for a given purchase, and the stock ledger to confirm the resulting item cost. If gross margin looks wrong on a product, landed cost allocation is the first place to look.
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