4.90 - Landed cost report - what you need to know

The landed cost report provides a list of all allocated landed costs. Two of the columns on this report are:

  • Total estimated landed cost

    This is the amount originally entered as the landed cost which was distributed across the items in the batch.

  • Total actual landed cost

    This value is currently calculated using the allocated landed cost per unit multiplied by the number of items received into stock. In 4.90, we are changing the way this value is calculated by pulling the data directly from accounting

Why is it changing?

As items are received into stock the Actual Landed Cost value increases, until all the items have been received. A final difference is seen between estimate and actual landed cost when the number of items on the order has been changed and more or fewer items than originally were received into stock. For example:

  • An order for 10 items is allocated a landed cost of £10, which calculates £1 unit cost. The estimated landed cost in this case is £10.
  • But 11 items are were actually received into stock. The actual landed cost accounted for is £1 x 11, so £11.

However, when reconciling the landed cost accounting it indicated that this report did always not show the same value as the accounting. The reason for this is rounding and can be explained using an example:

PO Row SKU Qty Actual total landed cost of £300 distributed by qty = unit cost Total landed cost accounted for = qty x unit cost
1 ITEM01 100 0.8571 85.71
1 ITEM02 100 0.8571 85.71
3 ITEM03 100 0.8571 85.71
4 ITEM04 50 0.8571 42.86
      Total landed cost posted to accounting = 299.99

With the above example the report would show 350 items received at £0.8571 each = 299.985 = 299.99 (2.d.p). But the accounting is created based on order rows where rounding is done per row before adding the results together. This results in the penny difference between the report and the accounting. Rather than hide the discrepancies created by rounding we want to ensure you are able to easily see where discrepancies are occurring so that they can be more easily reconciled and accounted for.

In addition, this change also means that any adjustments made to the accounting where the final landed cost was different from the estimate. This means the Actual Landed Cost column shows the actual amount you’ve accounted for, your true landed cost.

In Brightpearl it looks like this:

This purchase order contains 4 different products, totally a quantity of 350 items, plus a shipping charge of £300 which will be allocated as the landed cost.

lc po

When the goods are received into stock, the value of each item is uplifted by the landed cost of £0.8571 each:

goods in with lc

Now the items have been received, the landed cost report shows the actual landed cost as £299.99:

lc report actual balance

Drilling down on the value displays the accounting for the landed cost. We can see that each order row is rounded and when summed, do not come back to exactly £300:

lc accounting

This is fixed by entering a manual correction journal to the same landed cost code and using the same landed cost reference:

lc adjustment journal

After the correction has been made, the landed cost report displays the new actual landed cost which is exactly what appears in accounting:

lc report actual balance 2

Drilling down on the actual landed cost figure now, displays all the accounting including the manual adjustment:

lc accounting 2

How it works

To display the value posted to accounting for a landed cost report we look at the general ledger, applying the following filters:

  • Journal type = PG, LC or JJ
  • Nominal code = Landed cost account code (selected at point of allocating the landed costs)
  • Invoice ref = landed cost reference

The landed cost report will show the sum of these values. If you click on the value displayed on the report it will drill down to the general ledger with these filters applied so that you can see all of the detailed accounting entries.

How to make an adjustment to actual landed cost

  1. Go to Accounting > Enter Journal .
  2. Select the landed cost nominal code to adjust and enter the value to adjust by. This should be the same code as displayed on the landed cost report for the landed cost you are adjusting.
  3. Add a new row and specify where the adjustment is being posted to, for example 5000 Purchases will post the difference directly to cost of sales.
  4. Save the journal.
  5. Go to Reports > General Ledger and click to edit the journal.
  6. Enter the landed cost reference in the invoice ref field for the landed cost nominal row, exactly as it appears on the landed cost report for the landed cost you are adjusting.

lc adjustment journal

  1. Save the changes.
  2. Go to Purchases > Landed Cost Report to see the Actual Landed Cost value has been updated by your adjustment. Click on the figure to see the accounting details, including your adjustment entry.

Troubleshooting total actual landed cost

My landed cost report shows massive figures in the actual landed cost column

Each landed cost should always be given a unique reference. This enables your bookkeeper/accountant to view all the related accounting and reconcile each landed cost invoice as it arrives. This is also how Brightpearl calculates the actual landed cost for the report - by looking accounting using the landed cost reference. If your landed cost references are not unique then the accounting entries will be reported for multiple rows on the landed cost report. This does not mean that your accounting is wrong, just that it’s not possible to distinguish between the accounting for one landed cost and another.

What you need to do:

If you’re happy that the accounting is fine and balances you can mark the landed costs as reconciled and leave it as it is. Once marked as reconciled the item will be filtered out of the screen. But we recommend you start using unique references from now on. This might be the quote reference or if you’re using your own reference why not try adding the PO reference on the end?

Have more questions? Submit a request

0 Comments

Please sign in to leave a comment.