So this is the situation:
If I’m buying a bunch of steel items, and the supplier has an additional line item “Fuel Surcharge”, accounting wants me to take the price for that line and distribute it over all my lines, so that the Fuel Surcharge goes into the inventory costs. Something feels a bit odd about that, are we really doing things the correct way?
I don’t like it, because my PO doesn’t match the suppliers quote or the invoice/packing slip.
The intended way for these costs to make their way into inventory is through the Indirect Costs on the receipt.
These costs will be under ‘Material Burden’ when you look at the inventory costs.
How do you put that on the purchase order though? That work flow seems like it makes sense if you don’t know the cost until its actually delivered, but in this case the supplier is making it a line item on the quote.
When I looked at something similar, it was done through Landed Cost. I think that requires a separate module though.
Those costs would go under the Misc Charges on the PO, I believe.
Landed costs are a separate animal I think. You either use ‘Material Burden Cost’ or ‘Landed Cost’, and it’s one or the other.
I thought I should do a misc charge too, but I was told they wouldn’t be disturbed over the parts and included into the inventory cost. Perhaps that is because we don’t have a misc charge set up correctly to do this?
Yes it might just be a misunderstanding of how the cost is calculated. Understandable because it is not as simple as you think it is. The cost for the part on the receipt line is one ‘component’ of the cost of an item, which is translated to the ‘Material’ cost, but there are more components that are added up to determine the total cost.
So you are saying a misc line charge will be counted towards the inventory cost. What about a header misc charge, will that automatically be distributed across the inventory cost for all items?
The short answer is yes. You even have some control on the receipt side over how the costs are distributed: Value, quantity, etc.
Okay, sounds like you’ve pointed me in the right direction. We’ll have to test in the pilot to make sure it behaves how they want.
@Beth Appears to be correct. All the indirect costs and landed cost fields on the receipt entry screen are disabled. Checking the help indicates that this is because we do not have the landed cost module.
I looked at material burden, but that only lets you do it at the part level, and we need to do it at the PO level. Disappointing. I guess we will have to keep manually rolling it into the unit costs.
@Evan_Purdy I thought so. We didn’t buy the module because it was one more thing to maintain plus added cost. The accounting team ended up manually rolling it in as well.