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Thierry888's avatar
Thierry888
Experienced User
3 years ago

Inventory

Hi

 

When determining the markup price per unit, I will take into account the total cost per unit (i.e. unit cost + freight cost + local charges)

 

1. On MYOB, when entering a purchase (item), the unit cost will be recorded and linked to inventory.

The freight cost and local charges are entered separately under cost of goods sold (as service) and not linked to the items.

Is there a better way of doing it?

 

2. To calculate the total cost per unit, I need to workout manually the freight cost + local charges per unit, and then add the unit cost.

The freight cost+local charges have a separate account in the cost of goods sold

Can MYOB can workout the freight cost + local charges per unit?

 

3. Should the closing inventory include the freight + local charge?

In my cost of sales, I have purchase and freight charges on separate lines

 

Appreciate any feedback.

 

 

 

Thanks

Thierry

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    • Thierry888's avatar
      Thierry888
      Experienced User
      3 years ago

      Hi Mike_James  and CloverQ 

       

      Thanks for the info.

       

      Is this a common practice in Australia to include the landed cost in the inventory when preparing financial report?

       

      I understand this practice is good for calculating the business margin but can be done manually.

       

      If we have a project based for 5 years, and allocate all the expenses and income to the "Job", I think the results will be same whether or not landed cost is allocated in inventory. Now , how accurate is the Job reporting??

       

      With exeption of preparing financial report for a particular year, if land cost is in the inventory and there's a lot of inventory, the margin will be greater.

      Correct if Im wrong

       

      Thanks

      Thierry

       

      • Mike_James's avatar
        Mike_James
        Ultimate Partner
        3 years ago

        Hi Thierry888 , in accordance with generally accepted accounting principles and standard accounting practice, inventories should be valued at the cost of bringing them to their current state, therefore landed costs included. Your purchase of inventory for a long-term job may be upfront, and consumed over the life of the job, so if the landed costs were expensed in year 1, the profit for that year would be under-stated. 

         

        Job reporting is as accurate as the principles/processes behind it. 

  • CloverQ's avatar
    CloverQ
    Former Staff
    3 years ago

    Hi Thierry888 

     

    There's one way I'd suggest exploring, if you haven't already, is setting up the freight cost and local charges as items as well, then create a new item set it as the finished product built from the original item + freight cost + local charges, the cost of the components will transfer into the cost of the the finished product. 

     

    Here are the detailed guide on building items and Auto-building items, please do test it out first to see if this method would suit your company file set up and reporting requirements. You can make a copy of your company file, rename it then use the copy to test it out with real data.