A. Configuration

I. Cost type codes -

The cost type codes determine the type of cost that is incurred when the goods are landed into the warehouse or the landed cost of the voyage.  We can create a new cost type codes, edit existing codes.  This setup is similar to charge code setup.

Navigate to Landed cost > Costing Setup > Cost type codes – 

Cost type codes have various fields briefly explained below,

Reporting category – 

This field determines the cost transaction by category.

Debit – 

This field determines the financial impact of cost type. In this case, we will setup ‘Item’ so the cost will be added to the item.

Credit – 

This field determines the financial impact of cost type. In this case, we will set up ‘Vendor’ so it can be charged to vendor.

Clearing account –

This is the account where the landed cost will be accounted for.

Posting type – 

If you are planning to use standard costing (using standard costing), this account will be used for posting any variances. This account is used for posting landed cost breakdowns. This breakdown is created through periodic routine to update prices.

Standard cost variance account – 

This field determines the financial posting of any variances. 

E.g. if you are using standard cost functionality. Item standard cost of $20, the FOB is $15, and the freight is $5. When the invoice for the stock item, the item received at $20, but there’s a standard price variance of $3 for the item, because the actual FOB is $15. This variance is posted to the standard price variance account set up in the item posting profile. Because the estimated freight is $5.0, there’s no variance when the stock invoice is posted. However when the invoice for freight is received, the freight is $10 per unit, in this case the variance of $5 is posted to specified account (standard cost variance in this case).

Moving average variance account -

If you are using moving average costing, in that case any variance identified will be posted to this account.

E.g. The estimated freight is $5 however the invoice for freight is received, the freight is $10 per unit, In this case, a $5 variance must be posted.

This function works in conjunction with ‘Post adjustment as variance.’ If this parameter is set to ‘Yes’ on the landed cost parameters page, all variances between estimated and actual shipment costs will be posted to the moving average variance account that is specified here. When the post adjustment as variance is set to ‘No’, standard functionality will be used and variance will be applied to either inventory.

II. Setup vendor cost type group -

Navigate to Landed cost > Vendor cost type group

III. Setup item cost type group -

Navigate to Landed cost > Costing type > Item cost type group

IV. Setup auto cost -

Auto cost is for any transactions that are being posted, So now whenever any product is being transported by any shipped these cost will be applied,

Navigate to Landed cost > Costing setup > Auto costs

Auto costs have various fields briefly explained below,

Auto costs can be configured in different parameters, in this case we are going to define cost will be applied to shipping company ‘1002’ for any mode of delivery originating from port ‘USDAL and to port ‘USOAK’.

Here we are choosing Freight which is based on Quantity on order with Fixed amount $100, Insurance which is based on Percentage which is 10% of the line value or total value, Next one is Fuel based on the order. 

We can define as many auto costs as possible for different combination so that system calculate automatically.

V. Landed cost parameters -

Navigate to Landed cost > Setup > Landed cost parameters,

VI. Setup vendor for shipping company -

Navigate to Accounts payable > All vendors > Vendor

V. Setup voyage - 

Navigate to Landed cost > Voyages > All voyages

VII. Shipping containers -

Navigate to Landed cost > Containers setup > Shipping containers

VIII. Journey template - 

Navigate to Landed cost > Multi-leg journey setup > Journey templates 

B. Process -

(Actual Freight bill received after Item has been received and invoiced)

I. Create purchase order and confirm -

Navigate to Procurement and sourcing > Purchase orders > all purchase orders 

Click new to create a new purchase order and select vendor, and item that need to be received as shown below,

II. Create voyage -

Navigate to Landed cost > Voyages > All voyages

Create a new voyage by clicking on 'New' 

Select vessel, mode of delivery and shipping company.

Select purchase order from dropdown

Note: make sure purchase order approved and confirmed.

Select lines from 'Inbound orders' and 'Lines to select'

Click on 'Add to staging list' 

Once you have selected lines and clicked on'Add on staging list'

Click on 'View staging list'

Click on 'Add to new shipping container'

A dialog shows where we will select 'Shipping container', 'Shipping container type', 'Journey template' and 'Measurements',

This step will create and populate information based on auto cost based on our set up,

A line is added to 'Existing shipping container in voyage'

View voyage and estimated cost on voyage

Navigate to Landed cost > Voyages > All voyages

Click on voyage to view details,

The voyage lines section shows lines added to the voyage.

Click on voyage costs to view added cost type codes.

In this form, we can add additional cost types.

Click on General tab, inquiries tab to view costs inquiry on voyage form,

Post purchase receipt and purchase order invoice-

Invoiced purchase order -

Click on invoice under inovoice tab, journal section to view details

Click on vouchers to view vouchers,

Post actual freight invoice from carrier company and allocate against voyage cost lines -

Click on lines to enter invoice details,

Select function and voyage costs,

Select voyage from cost lines,

Select cost area,

After selecting cost lines and allocating cost, vendor invoice journal looks like below. D365 FO is posting several reversal entries to the Landed cost clearning account.

Let's look at the all vouchers created during vendor invoice (purchase invoice) and freight invoice posting,

Conclusion -

Purchase invoice posted with estimated freight cost of $725 and vendor invoice with actual fregiht cost of $1200.

Note:

If parameters 'post adjustments as variance' would have been on system would have posted separate adjustment entry,

As shown below in another example, 

In this example, Estimated cost was $674.5 vs actual freight was posted with $874.5. the adjustment entry for $200 was posted separately.