When average costing is used there is no way to mark up the cost - per inventory item - to cover behind the scene expenses, like freight in, etc. Since we often do not have freight in bills on products purchased until after the item is bought/sold there is no way to associate the true cost of the products per line item basis. The Landed Cost is a general related concept but it can't be done on a percentage basis and it doesn't apply to average costing.
Being able to apply at least some % of related costs to the actual cost/sale of a product on the back end would give a more realist margin per line item when margin is calculated.
Also when determining commissions and tracking sales reps performance - reports show merely the cost of the product and the sell price - thus using only the mark up when the system calculates the GP per rep or SO. This clearly overstates the return on the transaction and distorts company's profit level on a line item/SO basis.
by: Veronica T. | over a year ago | Sales & Distribution
Comments
How would you see this post to the G/L?
Ability to set a fixed landed cost method based on % of good received would be great... currently the landed cost is done at time of entry for each receipt of goods. The current method is not user friendly.