Hi All,
I’m trying to figure out if there is a a way to gross up the cost of my inventory to include the cost of the incoming freight. I know that we can do that in the purchase order process, but that would really bog down my AP. Is there a way to allocate it to the parts on the invoice? Is there a way to just allocate the entire GL balance to all parts on hand?
Thanks,
Mike
Hello, sorry for not answering as I am indeed searching for solutions about the same kind of requirement: including freigh costs into the material cost, as “freight in” costs are part of the costs which can be validly included in stock value according to IFRS standard (the only caveat I see is that if adding “freight in” costs results in overestimating your inventory, then you should reduce the value to “NRV”, net realisable value).
By managing freight costs in the purchase order process, I guess you mean adding charge lines to the purchase order? The problem is also that for many companies “freight in” is spread over many purchase orders and invoiced separately as a whole.
Delivery overheads are supported in costing to estimate standard costs, but for actual stock value I’m not sure there is an easy way to integrate the freight.
The main difficulty I see is that if you gross up the value of your actual inventory (e.g. with a mix of % / fixed amount rule), justifying the stock value towards auditors might be very complex: how can you make sure that the augmented stock value is consistent with the freight charges that you did support over a period and that you properly distributed the freight in charges only to the relevant parts? You would need to have a reconciliation process in any case.
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