MPH WMSLanded Cost
Allocate shipping, customs, and other costs to your purchase orders for accurate inventory valuation
Landed cost captures the true total cost of getting goods into your warehouse - not just the supplier's unit price, but also shipping, customs duties, insurance, and any other expenses incurred along the way.
Why landed cost matters
If you buy 100 items at 50 kr each and pay 500 kr for shipping, your real cost per item isn't 50 kr - it's 55 kr. Without landed cost, your inventory valuation will be understated and your margins will look better than they really are.
Landed cost gives you:
- Accurate inventory valuation - stock value reflects what you actually paid
- True margins - gross profit calculations use the real cost of goods
- Better pricing decisions - know your true cost floor
Creating a landed cost sheet
- Go to Purchasing and open a purchase order
- Click Landed Cost
- Give the sheet a name (e.g., "Import costs Q1")
- Choose an allocation method (see below)
- Add cost components:
- Enter a name (e.g., "Ocean freight", "Customs duty", "Insurance")
- Enter the amount and currency
- Click Save
The system automatically calculates how much cost to allocate to each PO line.
Allocation methods
The allocation method determines how the total landed cost is distributed across the purchase order lines.
| Method | How it works | Best for |
|---|---|---|
| By value | Proportional to line value (unitCost × quantity) | General purpose - higher-value items absorb more cost |
| By quantity | Proportional to number of units | Items of similar size and weight |
| By weight | Proportional to total weight (quantity × item weight) | Freight charges that scale with weight |
| By volume | Proportional to total volume (quantity × item volume) | Container or space-based shipping charges |
| Equal | Split evenly across all lines | Fixed per-line charges (e.g., inspection fees) |
Example: By value
| PO Line | Unit Cost | Qty | Line Value | Share | Allocated Cost |
|---|---|---|---|---|---|
| Item A | 100 kr | 10 | 1,000 kr | 40% | 200 kr |
| Item B | 50 kr | 30 | 1,500 kr | 60% | 300 kr |
| Total | 2,500 kr | 500 kr |
Landed unit cost
For each line, the landed unit cost is:
Landed unit cost = Unit cost + (Allocated amount ÷ Quantity)In the example above:
- Item A: 100 + (200 ÷ 10) = 120 kr
- Item B: 50 + (300 ÷ 30) = 60 kr
Cost components
Common cost components to include:
| Component | Description |
|---|---|
| Freight / Shipping | Ocean, air, or road freight charges |
| Customs duty | Import duties and tariffs |
| Insurance | Cargo insurance premiums |
| Brokerage | Customs broker fees |
| Port charges | Terminal handling, demurrage |
| Inspection | Quality inspection or testing fees |
| Currency conversion | FX fees if paying in foreign currency |
You can add as many components as needed. Each component has its own name, amount, and currency.
Finalizing
Once the purchase order has been fully received, you can finalize the landed cost sheet:
- Open the landed cost sheet
- Review the allocations - they are recalculated based on quantities actually received (not ordered)
- Click Finalize
What finalization updates
When you finalize a landed cost sheet, three things are updated:
- Goods receipt lines -
unitCostandtotalCostare updated to include the allocated landed cost - Stock movements - the inbound movements from the receipt are updated with the new unit cost
- Stock level batches - the
unitCoston each batch (matched by receipt number) is updated
This means your inventory valuation immediately reflects the true landed cost.
Finalization is permanent - you cannot edit a finalized landed cost sheet. Make sure the purchase order is fully received and all cost components are entered before finalizing.
Landed cost and valuation methods
The landed unit cost flows into all four valuation methods:
- FIFO - uses the batch unit cost (which now includes landed cost)
- WAC - weighted average is recalculated with the landed unit cost
- Standard cost - unaffected (uses the item's fixed cost price)
- LPP - uses the latest receipt's unit cost (which may include landed cost)