Understanding Item Charges (Landed Cost)

In definition, landed cost is the total cost of a shipment including primarily the purchase price and secondly additional associated costs such as: freight, insurance, customs, duties and taxes until product is delivered to its final destination. Therefore, handling landed cost represents an essential component in order to reach a precise profitability.

Dynamics NAV introduces an important functionality to handle the item charges, by either assigning item charges to purchase documents directly, or assigning item charges separately through a purchase invoice

Method One | Assigning Item Charges through Purchase Order

On the search field, type “Purchase Order”. Then click on “New” in order to create a new purchase order.

  1. On the vendor field, enter the vendor number
  2. Enter other associated details such as document date, vendor invoice number ..etc
  3. On the lines, under Type, choose Charge (Item)
  4. Then, from the No. ; choose from the predefined list of item charges. 
  5. In the example below, I have chosen Freight Charges from the item-charges list.
  6. Enter other associated details on the line level, such as description, unit amount …etc
Item Charges

Dynamics NAV – Purchase Order Entry

Once all the line details are completed, click on the “Line drop down list” in order to open the “Item Charge Assignment”

Item Charges Function

Purchase Order Line – Item Charges

This will open up the Item Charge Assignment (Purch) window, through which you are supposed to pick a specific cost layer (receipt) upon which the addition item charges will be allocated. As illustrated below, click on “Get Receipt Lines” in order to pick the receipt item/ items accordingly.

Ger Receipt LInes

Ger Receipt Lines

Purchase Reecipt Lines

Purchase Receipt Lines

 

The last step is related to how the item charges are allocated to the selected receipt line items, the options are:

  • Equally: The item charge value is allocated/ assigned equally to all the selected lines
  • Amount:The item charge value is allocated/assigned according to the line amount in each receipt line.
Assign Methods

Suggest Item Charge Assignment

Once assigned, you can proceed with posting the item charge document in order to update the original receipt lines.

Method Two | Assigning Item Charges through Purchase Invoice

Unlike the previous way, through which you can assign an item charge on the purchase order, indicating that the landed cos is determined beforehand. This method could be used when additional costs are received such as; freight on a separate invoice.

This method is not quite different from the previous one, go to Purchase Invoice entry window, and pick an item line type: item charges. Then proceed with the exact same steps illustrated below comprehensively.

Last importantly, here is the ledger entries associated with the receipt line indicating the origial purchase amount and the item charges (Items > Ledger Entries)

Purchase Price and Item Charges

Item Ledger Entries

Best Regards,
Mahmoud M. AlSaadi

 

3 thoughts on “Understanding Item Charges (Landed Cost)

  1. Pingback: Item Charges – Non Inventoriable Costs | Dynamics NAV Essentials

  2. Pingback: Item Charges – Non Inventoriable Costs - Microsoft Dynamics NAV Community

  3. Pingback: Item Charges – Non Inventoriable Costs – Dynamics365Blogs

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