How to integrate landed costs in the cost of the product?


Landed costs include all charges associated to a good transfer.

Landed cost includes = Cost of product + Shipping + Customs + Risk

All of these components might not be applicable in every shipment, but relevant components must be considered as a part of the landed cost. We have to identify landed cost to decide sale price of product because it will impact on company profits.


Applications configuration

First, you need to activate the use of the landed costs. Go to Inventory application ‣ Configuration ‣ Setting. Check accounting option Include landed costs in product costing computation & Perpetual inventory valuation, then click on Apply to save changes.

Then go to the Purchase application ‣ Configuration ‣ Setting. Choose costing method Use a 'Fixed', 'Real' or 'Average' price costing method, then click on Apply to save changes.

Landed Cost Types

Start by creating specific products to indicate your various Landed Costs, such as freight, insurance or custom duties. Go to Inventory ‣ Configuration ‣ Landed Cost types.

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