QuickBooks Landed Cost

Introduction

This tutorial will guide you through the process of tracking landed costs in QuickBooks Enterprise 2020. This advanced inventory feature is available in the Platinum edition of the software and allows you to better manage the costs associated with imported goods, such as freight and duties.

Step 1: Enable Landed Cost Feature

1. Open QuickBooks and navigate to Preferences.
2. Go to Advanced Inventory Settings.
3. Enable the Landed Cost feature. This will create a Landed Cost account classified as an "Other Current Asset."

Step 2: Set Up Landed Cost Items

1. Access your Item List.
2. Create items for each landed cost category, such as:
   • Duty
   • Freight
3. Ensure these items are categorized as Other Charges and are mapped to the Landed Cost account.

Step 3: Create a Vendor Bill

1. Open the bill for the inventory item you wish to update.
2. Enter the unit cost (e.g., $7 for almonds).
3. Add the freight cost:
   • Select the freight item you created.
   • Enter the freight amount (e.g., $100).
   • Specify the number of units (e.g., 50).
4. Save the bill.

Step 4: Allocate Landed Costs

1. Click on Calculate Landed Cost in the bill window.
2. This opens the Landed Cost allocation screen.
3. Review your vendor bills and select the ones that require allocation.
4. Choose the allocation method:
   • By quantity
   • By percentage
   • By amount
5. For simplicity, select the By Quantity method:
   • Allocate the total landed cost (e.g., $100) across the number of units (e.g., 50).
   • This will increase the unit cost (e.g., adding $2 to the original unit cost).

Step 5: Post the Changes

1. After adjusting the unit cost, click Post.
2. You will have an option to update the sales price based on the new cost; you can choose to skip this step if not needed.
3. Confirm the changes and close the window.

Step 6: Verify Changes

1. Check the updated cost on the bill:
   • Total amount should reflect the new unit cost (e.g., $9 each for 50 units).
2. Review the Valuation Summary Report to see the updated average cost (e.g., from $6.27 to $6.50).
3. Check the Landed Cost Account in your chart of accounts:
   • Ensure it shows a zero balance, indicating that costs have been allocated correctly.

Conclusion

You have successfully tracked and allocated landed costs in QuickBooks. By enabling the landed cost feature, setting up cost items, and properly allocating these costs, you can ensure accurate financial records and improve margin reporting. For further optimization, consider regularly reviewing your valuation reports and landed cost allocations to maintain accurate inventory management.