Freight Cost Allocation

(0) Share

Report

Posted on by Community Member

Dear All,

How would you allocate the freight costs derived from shipping a specific item to a certain customer?

i.e we produce item A and B, and we ship them both to customer "X", the freight cost is 1000€ ( we recieve the invoice from the logistic company a few days after shippping), the truck is filled 60% with item A and 40% with item B.

How do we allocate this 600€ and 400€ of costs individually to the shipped items A and B?

Thanks in advance,

*This post is locked for comments

I have the same question (0)

All responses (21)

Answers (0)

Suggested answer

Andrey Baludin 3,941 on at

Like (0)

Report

RE: Freight Cost Allocation

Hi!

You can use item charges. Official manual here:

msdn.microsoft.com/.../hh168616(v=nav.90).aspx

When you will choose Item Charge Assignment - you can use 2 types - Equal or Amount. You need to select Amount.

msdn.microsoft.com/.../hh168551(v=nav.90).aspx

Was this reply helpful? Yes No
Community Member on at

Like (0)

Report

RE: Freight Cost Allocation

Thanks, Im aware of this approach, how do I reflect then this cost in the account schedules ?The freight costs get booked in the corresponding account, although I can see a balance for this account if I acces to it through the chart of accounts, I see no balance whatsovere if I acces to this account through account schedules. Why is that?

Was this reply helpful? Yes No
Suggested answer

GDP 274 on at

Like (0)

Report

RE: Freight Cost Allocation

If you know the amount of Freight in advance then you can add charges in Order itself or you can book the same in Purchase Invoice by assign charge items

Was this reply helpful? Yes No
Community Member on at

Like (0)

Report

RE: Freight Cost Allocation

We dont exactly know the amount of freight in adavance. Thanks

Was this reply helpful? Yes No
Hannes Holst 5,767 on at

Like (0)

Report

RE: Freight Cost Allocation

[quote user="Pollux1986"]

We dont exactly know the amount of freight in adavance. Thanks

[/quote]

In this situation you can create a simple Sales Invoice with a charge item, when you know the costs. The original Sales Order can be posted beforehand already.
In the Sales Invoice-Page, go into "Line" -> "Related Information" -> "Item Charge Assignment"

In this window you are able to select Items from Posted Shipments and link the freight costs against it.

Here is the process documentated: msdn.microsoft.com/.../hh168603(v=nav.90).aspx

Was this reply helpful? Yes No
Community Member on at

Like (0)

Report

RE: Freight Cost Allocation

Why sales invoice? Shouldnt it be a purchase invoice that we should be creatoing? as the charges for freight come from a subcontractor, so a vendor. Although I follow this process then these charges are not reflected in the account schedules.

Thanks

Was this reply helpful? Yes No
Hannes Holst 5,767 on at

Like (1)

Report

RE: Freight Cost Allocation

[quote user="Pollux1986"]

Why sales invoice? Shouldnt it be a purchase invoice that we should be creatoing? as the charges for freight come from a subcontractor, so a vendor. Although I follow this process then these charges are not reflected in the account schedules.

Thanks

[/quote]

Hi,

You wrote Customer in your initial post.

Of course you can apply the above approach to Purchase-Documents also.

Here is the first step described: https://msdn.microsoft.com/en-us/library/hh168624(v=nav.90).aspx

And here is described how to apply item charges against posted purchase documents: https://msdn.microsoft.com/en-us/library/hh168616(v=nav.90).aspx

You are able to control the affected accounts of the Charge Item using the Gen. Prod. Posting Group. Just search for "Item Charges" and you can set up the product posting group and the VAT posting group. The posting groups determine the G/L account for the financials.

Of course you are not forced to use Item Charges to handle freight costs. Item Charges are just the most modern approach, which enables you to reflect these costs in the Unit Costs of the Items. As an alternative, you could post directly on the G/L-account (select "Type = G/L Account" in the Purchase Document) or you could create an Item for freight. But then you would have to maintain an inventory. But the last two options do not have an impact on the Unit Cost calculation.

Was this reply helpful? Yes No
Suggested answer

RobertasR 5,004 on at

Like (1)

Report

RE: Freight Cost Allocation

Hi Pollux,

it is the Purchase Invoice with the Charge Item, and it is assigned against the sales shipment. The reasons you are not seeing it on your account schedules might be different - depending on the setup of Item Charges, Dimensions, etc.

The main reason is probably in the way system posts item charges for shipments - these cannot go into the cost of goods sold (as the stock is already shipped), so the cost is marked as 'non-inventoriable' and will be posted to specific accounts based on posting setups. If Account Schedules do not account for these GLs, then it won't show.

Robertas

Was this reply helpful? Yes No
Community Member on at

Like (1)

Report

RE: Freight Cost Allocation

Yes sorry, that was not very clear, I meant that depending on how far is the customer from our factory we have to pay les or more shipping costs,therefore although the same item, at the end of the day, its margin will be larger or shorter depending on the customer we sell it to.

Was this reply helpful? Yes No
Community Member on at

Like (0)

Report

RE: Freight Cost Allocation

@Hannes Holst

Was this reply helpful? Yes No