Landed Costing

Before you Get Started

• I do not recommend you use "Average Invoice" Costing Method (even though that is what I use below). If you want to use Average Costing, use Average PO. The reason has to do with the timing of when the costing records are created.
• If you are using a newly created client, please note that your client probably only has one Cost Element => "Standard Costing". To use Average PO costing, you need to create the "Average PO" => Cost Element record. If you set Accounting Schema window => Costing Method field to "Average PO" and reboot the iDempiere application server, the system will create the "Average PO" Cost Element for you. You can disregard the Cost Element window => Calculated field. It does not seem to be used any more.
• If you are using a newly created client, you will need to create a Cost Element record (example: Freight) whose Cost Element Type field = "Material" and whose Costing Method field is blank or null. You will use this record below in the Purchase Order window => Estimated Landed Cost sub-tab.

Landed Costing Introduction

Landed Costing Summary

Landed Costing Summary Picture

Landed Costing Difference Between Average and Standard

Landed Costing Example - Simple

Landed Costing Example - PO Over Estimated

Landed Costing Example - PO Under Estimated

Landed Costing Example - Ship Product Before Landed

Landed Costing Example - New Cost Element

Landed Costing Average Invoice Concerns

Landed Costing  Standard Cost Overview

2014-10-21 Landed Costing Review and Standard Costing

• Introduction
• 0:01:00 Question from Dave - landing against multiple MR lines with potentially multiple lot/serial for a given product
• 0:05:00 Show example with Landed Cost against a MR with multiple lines
• 0:07:30 Live example of landing a cost where the original vendor is charging freight
  • Note this scenario illustrates a bug
  • 0:15:00 - Result - the system should not have posted the the Average Cost Variance - instead it should have increased inventory an changed my cost to $2 (from $1)
  • 0:21:00 - 0:26:00 Illustrate an example of how it should work using separate invoices
• 0:18:00 Discussion of Cost Element as it relates to Costing Method and the landing of costs.
• 0:26:00 Landed Costing in a system configured for Costing Method = "Standard Costing" - Demonstrated by example
  • 0:28:00 spreadsheet estimation
  • 0:30:45 how to get costs in a spreadsheet into the system - use the M_Cost => Future Cost field - Standard Cost Update process
  • 0:34:00 Create new Product Category to set all Products under it to Costing Method = "Standard Costing"
  • 0:34:45 Create new Product - note that I forgot to set the Product Category
  • 0:35:15 Use Cost Adjustment to set the initial cost of the new product - note that I forgot to complete the Cost Adjustment
  • 0:37:00 Create a M_Cost record for "Freight" and "Cost at Source" (non-costing method Cost Element)
  • 0:40:30 Create a Purchase Order with the new product
  • 0:41:00 Create the Material Receipt
  • 0:42:45 Create the Vendor Invoice - Review Matched Invoice - note that delta between Invoice Price and Cost goes to IPV (Invoice Price Variance)
  • 0:44:15 Create Vendor invoice for landing charge (for FedEx for example)
  • 0:45:00 Discussion about the Magic of standard costing and IPV
  • 0:49:00 How do defend IPV the current balance and update costs to account for future corrections
    • 0:50:34 TANGENT - Account Element - how to structure IPV in standard costing - landed costing
  • 0:52:15 The power of using averages when evaluating land costing
  • 0:54:30 SQL Query to show averages across Landed Cost Allocations
  • 0:57:30 What happens when you over or under accrue in Invoice Price Variance (IPV)
  • 0:58:30 When updating costs based on the above analysis, look at changes to inventory valuation and future sales before making the change.
  • 1:00:00 The need for a core code change to prevent landed cost posting (doc_invoice) when a Product Category or Accounting Schema => Costing Method = "Standard Costing"
• 1:05:00 do you embed the outbound shipping cost to the cost of the product?

Landed Costing - Standard Cost - Query to find Average

select m_product_id, m_costelement_id, avg(amt/qty) as average_cost_comp, count(amt) as count, max(amt/qty) as max, min(amt/qty)as min, stddev(amt/qty) as stddev
from C_LandedCostAllocation
where qty > 0
group by m_product_id, m_costelement_id

• You could use sub query to pull total receipt count
• You could create a base view that brings in different time periods (last month, 3 months, 6 months, etc...)