The calculation of landed costs for your stock items can seem to be mysterious and complex. Correct formulas needed to calculate the numbers you need before your markup goes on top can make this a challenge to the best of your inventory personnel. The steps involved in this process are as follows:
First, add the item’s purchase price and the cost of shipment. Ascertain if the freight forwarder handling the shipment if insurance is included in the shipment fees. If it is not included, add the cost of shipment’s insurance.
Find the customs fees, taxes and duties for the shipment. If the shipment is coming from a foreign country, use your country’s Harmonized Tariff Schedule to enter the type of item, and then use the pop-up listing to find the further description of the particular item and select its item code for additional information and a rate.
Divide this completed cost of the shipment by the number of items within it to calculate the resultant landed price per unit.
SIMMS 2013 Inventory Management software will automatically calculate your landed costs for you, which will assure the accuracy of your projected profits and let you concentrate more time on other details. Contact KCSI today to get information on how SIMMS can handle your landed costs challenges for you.
Today’s ToolTip comes from KCSI Technical Writer Marc Kondylis:
Landed Cost Setup
Landed costs are any charges associated with the inbound transporation of an item. You can pre-define these costs and then apply them when you create your receipts of goods.
1. On the Setup menu, point to Prices, Discounts, Costs, and then click Landed Costs.
The Landed Cost Setup dialog box opens.
2. On the Items tab, in the Item list, select an item.
3. For each type of landed cost (such as Duty rate, Excise Tax, Freight) type a percentage or fixed dollar amount.
4. Click the Vendors tab. For each type of landed cost, in the appropriate list, select the vendor that you pay the landed cost to.
SIMMS Inventory Management software contains the landed costing features required to make this important process easy. All cost elements for purchased items are identified, while concurrently the progress of orders and their shipments are tracked in real-time. Both lot and serial numbers allow users to track stock in the system and allow their easy assignment to sales projects or orders, while building a shipment and sales history. Warehouse costs can be updated automatically, allowing smooth and simple posting of all landed cost prices. In addition, several orders can be combined into single shipments, saving you time and money on orders made through your decided vendors.
Other available features include the ablity to use FIFO (First-In, First-Out) allocation of goods to track your costs. Generally, items are “pre-costed” before the shipment arrives, and their separate costs are allotted based on several criteria such as weights, value, quantities and/or volume, depending on your needs. When combined with SIMMS’ General Ledger module, your actual expenses and revenue can be pinpointed, allowing your best decisions to be made quickly and soundly, down to the level of separate bills of costs for a single item.
To see more on the SIMMS’ Landed Costing features, read more by clicking here, or gain access to a video illustrating the features here.
The calculatation of landed costs for your stock items can require a slide rule, an abacus and a compass at times. Lacking familiarity with the correct formulas needed to calculate the numbers you need before your markup goes on top can make this a challenge to the best of your inventory personnel. SIMMS Inventory Management solution automatically calculates landed costing for you, assuring the accuracy of your projected profits and letting you focus more time on other matters. Contact KCSI today to get SIMMS to take care of this task automatically for you.