Landed Cost Allocation Calculations

Percent Allocation

This calculation multiplies each PO or TO line's total material cost by the user-entered allocation percent.

EXAMPLE:

PO line total material cost = 120

PO Header % = .05

PO line Landed cost = 6

PO line unit cost = 6 / PO line qty ordered

Amount Allocation

This calculation distributes the user-entered estimated amount for each landed cost category evenly across all PO or TO lines according to the Allocation Method selected.

Cost Allocation

The total material cost for the PO or TO will be determined and the proportion of each PO/TO line's material cost to the total material cost for the PO/TO will be determined. The estimated landed cost amount will be distributed across all PO/TO lines using the same proportion to determine the landed cost amount to be applied to the PO/TO line.

EXAMPLE:

TO total material cost - overridden material cost = 1000

Estimated landed cost - overridden landed cost = 300

TO line material cost = 100

% TO Line to total = 100 / 1000 = .10

TO line landed cost = .10 * 300 = 30

TO line unit cost = 30 / PO line qty ordered

Weight Allocation

The total weight for the PO/TO and the proportion of each PO/TO line's weight to the total weight is determined. The estimated landed cost amount is distributed across all PO/TO lines using that proportion.

EXAMPLE:

PO total weight - overridden PO weight = 2000

PO line weight = 40

Estimated Landed Cost - overridden landed costs = 200

% PO line wt to total = 40 / 2000 = .02

PO Line landed cost = .02 * 200 = 4

PO Line unit cost = 4 / PO line qty ordered

Caution: You will receive a warning if any zero weight lines exist.

Zero weight line items will not have any landed cost assigned.
Weight allocation will be disallowed if all PO lines have zero weight.
Weight U/M's will be ignored when weights are being totaled. For example: 1 kg + 5 lbs = 6.
You will receive a warning during the Allocation Activity if multiple weight U/M's exist on the PO/TO.
The Allocation Activity will use the Base Quantity in all calculations.

Unit Allocation

The total number of units for the PO/TO will be determined and the estimated landed cost amount will be divided by that total to determine the per unit cost.

EXAMPLE:

TO total qty ordered - overridden qty ordered = 1000

Estimated landed cost - overridden landed cost = 2000

TO line unit cost = 2000 / 1000 = 2

CAUTION: Unit Allocation warnings and limitations:

You will receive a warning, if, during the Allocation Activity, the PO/TO line items do not use the same U/M.
The Allocation Activity will use the Transaction Quantity in all unit calculations.