Manual per-line cost allocation

What This Does

When you receive a purchase that includes landed cost charges (such as freight and customs), Usystems calculates how much of each charge should be allocated to each item on the document. You choose the allocation method (by value, weight, or volume), and the system distributes the total landed costs accordingly. This ensures that the final cost recorded for each item includes its fair share of all additional expenses.

Before You Start

• Your purchase order or cash purchase document must already be created and include landed cost charge lines.
• Ensure that all inventory line items are recorded with their quantities and purchase prices.
• If using allocation by weight or volume, verify that each item has the weight or volume data entered in the product record.
• You should understand the difference between allocation methods; see Allocation methods: by value, weight or volume for guidance.
• You need permission to receive purchases (process goods in).

Steps

1. Navigate to Purchases → Purchase Orders or Purchases → Cash Purchases.
   Open in Usystems · Open in Usystems

2. Find and open the purchase document that contains landed cost charges and is ready to be received.

3. Click the Receive or Process Receipt button (or equivalent action to mark the goods as received).

4. A dialog or form will appear showing:

   • The inventory items on the purchase
   • The landed cost charges you previously recorded
   • An option to select the Allocation Method

5. Choose your allocation method:

   • By Value: Select this if landed costs should be divided based on the purchase price of each item.
   • By Weight: Select this if landed costs should be divided based on the weight of each item.
   • By Volume: Select this if landed costs should be divided based on the volume of each item.

6. Review the calculated allocation shown in the dialog. The system will display:

   • Each item's allocated cost (the additional amount being added to its unit cost)
   • Totals to verify that all landed costs have been distributed

7. If the allocation looks correct, confirm the receipt. If you need to adjust, you may cancel and edit the document (e.g., correct a weight or volume value in a product record).

8. Once confirmed, the receipt is processed:

   • Each inventory item's cost is updated to include its allocated landed cost
   • The purchase record is marked as received
   • Journal entries are created to reflect the full cost

Accounting Impact

When you allocate and confirm landed costs:

• Debit: Inventory (or Goods-in-Transit if not yet physically in your warehouse) is debited for the full amount, including allocated landed costs.
• Credit: Accounts Payable is credited (if the purchase is on credit) or Cash is credited (if paid) for the full invoice amount plus all landed costs.
• Each item's cost record now includes its share of freight, customs, and other charges, so that when the item is later sold, its allocated cost flows into COGS.

Tips & Common Mistakes

• Check product data before receiving: If allocating by weight or volume, ensure the weight and volume fields in your product master are accurate. Wrong data will lead to incorrect allocations.
• Choose the right method: If you record a weight-based allocation but your items have no weight data, the system may fail or produce unexpected results. Match your method to your data.
• Document the choice: If different purchases use different allocation methods, it's helpful to note which method was used so you can explain cost trends later.
• Review before confirming: Always review the calculated allocation totals before you click confirm. An obvious error (e.g., one item receiving 90% of costs when it should be 30%) is easier to catch now than to fix later.
• Return adjustments: If you later return part of the purchase, the allocated costs are automatically reversed for the returned items.