Mastering Landed Costs for WMS locations in Business Central: Two Essential Scenarios

 

 Mastering Landed Costs for WMS locations in Business Central: Two Essential Scenarios


Navigating the complexities of landed costs in Dynamics 365 Business Central can be a daunting task. Landed costs are additional costs incurred during the purchase of goods, such as transportation, duties, and insurance, which need to be allocated to the cost of the items to accurately reflect the total cost of purchase in your financial records. In this blog, we'll explore two scenarios: one with a simple location setup that does not require warehouse receipts, and another with a Warehouse Management System (WMS) location that does. Let’s dive into each scenario with examples to clarify the process.

 

Imagine "Company XYZ" imports lamps and has a simple location setup. They order 100 lamps for a total of $5,000 and incur a $500 shipping charge.

 Scenario 1: Non-WMS Location – Direct Posting

In businesses without an advanced warehouse setup, handling landed costs is straightforward. Here's how you manage landed costs when warehouse receipts are not required:

1. Create a Purchase Order (PO): Initiate a new PO for the goods you want to purchase. Let's say you order 100 designer lamps at $50 each.

2. Assign Item Charges: Add an item charge and assign to the item line to cover additional costs such as freight or import duties. Suppose the shipping cost is $500.

3. Post the Purchase Invoice: Once the goods are received, post the purchase invoice. The system will allocate the $500 shipping cost across the 100 lamps per previously assigned item charge, adding $5 to the cost of each lamp.

 

 Scenario 2: WMS Location – Indirect Posting

For businesses with an advanced WMS setup, the process involves an additional step due to the warehouse receipt requirement.

1. Create a Purchase Order (PO): As before, you create a PO. Let's use the same example of 100 designer lamps at $50 each.

2. Create a Warehouse Receipt: When the goods arrive at the warehouse, a warehouse receipt is created.

3. Post the Warehouse Receipt: Post the warehouse receipt to account for the physical inventory. The cost of the lamps in inventory is recorded as $50 each at this point, excluding the item charge.

4. Create Another Purchase Invoice for Item Charges: To account for the item charges, create a new purchase invoice.

5. Use the "Get Receipt Lines" Function: Retrieve the posted warehouse receipt lines using this function.




6. Assign the Item Charge: Allocate the $500 shipping cost to the retrieved receipt lines.

7. Post the Purchase Invoice with Item Charges: Once posted, the system updates the cost of the lamps to include the $5 shipping charge per lamp, reflecting the total cost of $55 each.

Understanding how to handle landed costs in BC can significantly impact your inventory valuation and financial reporting. In a non-WMS location, the process is direct and the system automatically includes item charges upon posting the purchase invoice. In a WMS location, the process requires an additional step to include the item charges after posting the warehouse receipt. By mastering these procedures, you can ensure that your financials accurately represent your inventory costs, leading to more informed business decisions.

If you need more advanced features to manage your landed costs, it is always a good idea to check out the AppSource for a 3rd party extension in BC. 



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