Add Duty and Freight to PO

I don't understand why the freight that is entered onto a PO is not added to the item costs upon receiving inventory. This is part of my inventory value, so it hould be reflected in the cost of each item.

As a result, have a painful two step process because I must send the PO to the supplier using thier cost, but before I do my receiving, I have to manually apportion the freight to each item.

The whole story: Actually, my situation is more complicated because my suppliers are in a different country. Not only do I need to add freight, but duties, handling costs, ocean freight, etc. These all form part of my inventory value. Since I do not need to track these costs seperately (only need an accurate total landed item cost in the database) I could use the freight field if the software would apportion the freight among the PO items. The same thing applies to the Sales Tax % column. Sales Tax I pay to a supplier should be part of my inventory value, but the item cost uponreceiving does not take it into account. I could similarly use this field by establishing a factor that incorporates all costs, however, RMS does not apportion this cost to the items either.

This must be bothering the accountants out there. I just don't understand how the RMS inventory value is supposed to be correct when RMS does not take into account these costs. Am I missing something?

Thanks,

Jason

P.S. I do not want a Landed Cost add-on module. Again - I do not care about the individual components. I just want an accurate inventory costs without monkeying with the PO or manually updating costs.

P.S.S. Forget about the Formula button. This only works if you update your supplier costs religiously when there are changes. Often we just update the cost on the PO if there is a change, and forget or don't bother to updat the supplier cost. For some inexplicable reason, the Formula does not allow you to simply multiply the PO costs by a factor.

Reply to
Jason
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Reply to
Craig

Huh? Who is you accountant so I can stay away from him! According to GAAP, Freight In is considered part of inventory value. Your accountant may be assigning freight costs to an expense account and then applying that account at year end to COGS and inventory based on a formula. If you are expensing all incoming freight, you are overstating you expenses and reducing your net profit - the IRS does not like this. Yo can only expense Freight In in the current period (and should) if the charges are "abnormal."

Freight, any tax paid, and duty ARE part of your inventory value, and RMS should take this into account to provide an accurate value.

Cost is defined as "the sum of expenditures incurred to bring an item to its existing condition and location" according to SFAS No. 151. Check out:

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IFRS (International) accounting standards are the same in this respect.

Jason

"Craig" wrote:

Reply to
Jason

On my Coproate Tax return, there are two line items for COGS, goods and shipping. Both are added together to form the total COGS. Both items must be reported SEPARATELY.

We use the total of our COGS to determine what markup we need on all products.

Of course, if you know that products from a certain supplier are responsible for most of your COGS-Shipping costs, you can markup those products more and leave the others lower.

Our costs to send the items TO our customers are also rolled into COGS-Shipping and are NOT included in POSTAGE expense.

So, the > Huh? Who is you accountant so I can stay away from him! According to GAAP,

Reply to
Mickie

Where did you get that? There is nothing in GAAP that says COGS must be seperated into Freight In and staright cost.

This is obvious, but has nothing to do with Inventory, which is my issue.

This is simply not correct. Your incoming freight costs are absolutely inventory cost. If not, why ould they end up in your COGS? What you're saying does not make sense.

Freight In can be handled as an accounting function from a balance sheet perspective, but what good is the profit margin calculation in RMS without accounting for freight in? It's completely useless!

Can a CPA weigh in here?

Reply to
Jason

This is handled by a freight allocation button in the new release of Power Ops. You can allocate by units or pro-rate by dollar value. Power Ops is included in Matrix Master and RMS Toolkit. Contact your RMS reseller for details.

Greg Digital Retail Solutions

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Reply to
Greg [DRS]

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