FAQ: Allocation

Q: What happens if I don't allocate landed costs when I receive goods?

A: In Usystems, the system requires you to choose an allocation method and confirm the landing of costs as part of the goods receipt process. You cannot simply receive goods without addressing landed cost charges. If you try to skip this step, the system will prompt you to select an allocation method before finalizing the receipt.

Q: Can I change the allocation method after I've received the goods?

A: No, once goods have been received and landed costs have been allocated, the allocation is locked in the cost record. If you discover an error after receipt (e.g., you chose the wrong allocation method), you may need to create an adjustment or consult your administrator about reversing and re-receiving the goods with the correct method.

Q: What if some items on my purchase don't have weight or volume data, but I want to allocate by weight?

A: The allocation will only work correctly if the data exists. If you choose to allocate by weight but some items have no weight entered in their product record, the system may:

• Assign zero weight to those items, effectively excluding them from the weighted allocation (other items receive larger shares)
• Fail with an error message asking you to enter missing data
• Use a fallback method

To avoid problems, ensure all product data (weight or volume) is complete before you choose a weight- or volume-based allocation method. If data is missing, either add it to the product records or use a different allocation method (e.g., by value).

Q: If I use "allocate by value," will the system use the purchase price or the standard cost?

A: The system uses the purchase price (the unit price on the purchase order or cash purchase document) to calculate the allocation. It does not use standard cost or any other cost method. The purchase price is the agreed price at the time of purchase.

Q: Can I manually override the allocated amount for individual items?

A: In most cases, no. Usystems calculates the allocation automatically based on your chosen method and the item data (price, weight, or volume). The allocation is not typically open for manual item-by-item adjustment. If you need custom allocation, you may need to work with your administrator or use an adjustment document after receipt.

Q: What if I receive only part of a purchase order? Do I allocate landed costs on the partial receipt?

A: Yes. When you receive a partial shipment (e.g., you ordered 100 units but only received 50), you typically allocate landed costs based on what you actually received. Usystems may offer options to:

• Allocate landed costs only to the items received (recommended)
• Defer allocation until the full order arrives
• Split landed costs proportionally across multiple receipt batches

Check with your system to see which option is available and follow your company's policy for handling partial receipts.

Q: How does landed cost allocation affect my inventory reports and COGS?

A: Landed cost allocation directly impacts:

• Inventory valuation reports: Each item's value now includes its allocated landed cost, so inventory on hand is valued higher.
• Cost of goods sold (COGS): When you sell an item, its full landed-cost-adjusted price is recognized as COGS, ensuring that your profit margins reflect the true cost.
• Gross margin analysis: Because COGS now includes allocated landed costs, your gross margin may appear lower than if you only counted purchase price COGS.

This is the intended behavior and ensures your financial reporting is accurate.

Q: If I return items from a landed-cost purchase, do the allocated costs get reversed?

A: Yes. When you create a return for items from a landed-cost purchase, Usystems automatically reverses the allocated landed cost associated with those returned items. The remaining items keep their proportional share of the landed costs, and the returned items' costs are adjusted accordingly.

Q: Can I use different allocation methods for different landed cost charges on the same purchase?

A: In most cases, no. A single purchase document typically uses one allocation method for all its landed cost charges. However, if you need different charges to be allocated using different methods, you could:

• Split them into separate purchase documents (one with freight allocated by weight, another with customs allocated by value)
• Consult your administrator about custom allocation logic

For simplicity, most businesses choose a single method per purchase.

Q: How do I know if my landed cost allocation is correct?

A: After allocation, review:

• Total check: The sum of all item allocations should equal the total landed cost charge.
• Logic check: Does the allocation method match the nature of the charge? (e.g., weight-based for freight, value-based for customs)
• Item sanity check: Do items with higher relevant value/weight/volume have higher allocated amounts? If not, the data may be wrong.

If something doesn't look right, you can cancel the receipt and re-do it with corrected data or a different allocation method.