TRUE JOE WAYS - Allocating Freight to Inventory Items



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% of freight per item

Freight equals $6000.00 for 1764 pieces...How do I work out percentage?

Anne Reid more than 2 years ago

Is it only 1 line item.

Even though our 'comment section' is not designed as a Q&A forum, I will be happy to give you some figures based upon the limited information you provided.

If the 1764 pieces represent the entire quantity of a single line item (and the only item associated with this freight bill), then if you divide the $6000.00 by 1764 you can see that the 'freight cost per individual item' equals $3.40136. This figure can be added to the unit cost for the item in order to include freight within that unit cost.

I can't do the percentages of cost because you only included the freight figure and not the total 'unit cost' for the 1764 pieces.

Now if the 1764 pieces are not all the same item, and not all the same 'unit cost', then I really can't compute the value of landed freight as part of the invoice as a whole since I don't have enough information, since the freight cost would then be a function of 'cost per item' as a percent of total cost and freight should be allocated accordingly.

Best of luck,

Murph more than 2 years ago

Just landed a manufacturing client & needed that Freight Clearing Account

Thanks Joe!
I am still setting up inventory for my new manufacturing client and was wondering how I was going to handle inventory purchased when the freight is on a different bill. The Freight Clearing account is genius. Thank you so much. ....Melissa Bryant, Empirical Consulting

Melissa Bryant more than 2 years ago

Landed Freight

Very nice. Thank you

Gerri Martin more than 2 years ago

Adding freight to inventory items

The proposed method is relying on the assumption that the product weight is related to the product cost. Caution as this may not be the case in a manufacturing firm; small, light weight items can be costly and the large bulky items could cost very little. So the allocation should be adjusted to per weight not price.

Christine Hoke more than 2 years ago

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