How do I absorb freight charges into the inventory cost of my items (Landed Costs)?
In DBA, your shipping charges are booked as a cost of sales GL transaction to the PO Shipping Cost account at time of PO Invoice. These charges are not absorbed into your inventory value for your purchased items.
If you want to reflect a significant landed cost into your inventory value, there is a work around that you can utilize to incorporate your shipping cost into your raw materials:
After you receipt your raw material, you can change the inventory cost of this item to reflect the averaged cost of the item after adding in the freight charges. To do this, go to the Inventory > Change Inventory Cost menu. You will need to calculate a new averaged inventory cost by dividing the total shipping charge by the current quantity on hand for the item. The result of this calculation indicates the amount by which you should increase your inventory cost.
For example, if you have a $1000 freight cost, and you have 2000 units on hand, you would take 1000 / 2000 which indicates an increase in your average inventory cost of $.50 and you would use the Change Inventory Cost feature to increase the inventory cost of the item by that amount. So if the inventory cost of the item in this example was $10.00, you would then enter $10.50 as the new inventory cost.