Landed Cost
Landed cost is the additional expense of getting purchased goods into usable inventory, such as freight or duties, allocated under an accounting policy. It can materially change product cost and margin.
A worked example
A practical example to make the concept clear.
| Step | Illustrative record and result |
|---|---|
| Starting record | Buy 100 identical units for 1,000,000 IQD; freight is 100,000 IQD. |
| Change or calculation | Assume finance approves capitalising this freight and allocating it equally across the 100 units: 1,000 IQD extra per unit. |
| Meaning and exception | Illustrative unit cost: 10,000 + 1,000 = 11,000 IQD. Mixed weights or values may require a different allocation policy. |
Why it matters
Allocation can change the cost attached to inventory and the cost later assigned to a sale. Finance must approve eligible costs, allocation method and valuation treatment before treating an example as a posted result.
Make it practical
Which freight or duty charges enter inventory cost, and under which allocation rule? Test the answer with the exact release and application package under consideration. Explore Datrylo applications.