Question How to include logistic cost as a cost element for purchased items.


New Member
We buy several types of materials with EXW incoterm. As to have a clear picture on item cost and to be in line with local regulations we should make the reception of the goods (mainly base material) with all the additional costs included (transport cost, customs tax, other logistic expenses). Is there a solution in QAD to deal with this issue?

My approach was to link a cost element somehow to these specific purchased items (we can calculate these costs fairly accurate and make corrections during month-end closing).

Does anyone has experience in this matter? Eventually if you have ideas for a better/other solution, approach.

We currently use QAD 2011 EE.

Many thanks.
this is an old post but here is some advice... use the overhead directly at the item level would be an option. To handle logistics costs separately from the rest, make sure the Product Line definition has overhead account is some "Logistics Cost Estimate/Reserve" expense account. You can add the Overhead (OVH) cost directly at the item level (or item cost maintenance) or the corresponding maintenance screen for Item Cost Detail Maintenance (if you want to have transport, tax, etc defined separately, rolling to overhead).

Note that during PO Receiving transaction, the OVH is removed from the total standard cost for the purpose of calculating the PPV. This does not happen with the other cost categories (MTL, LBR, BDN, SUB), and that is exactly what you want so any PPV is kept separate from "logistics overhead".

Example a PO purchase price of 50USD at std cost where standard material was defined as 47 and along with overhead of 5USD for "logistics cost reserve", your inventory will increase by 52 upon receipt, the PPV upon receipt will be 3 (52 - 50 - 5)… and not 2 (52 - 50).

Purchase Order Receipt Transaction (* denotes coming from preset account, such as prod line):
*Inventory = 52
*PO Receipts = -50
*Overhead applied (Logistics Cost ESTIMATE)= -5
*PPV = 3 (unfavorable)

Supplier invoice (for the material, not messing with AP Rate or Qty variance):
*Accounts Payable = -50
*PO Receipts = 50

Say the logistics provider sends you a bill for 4USD, you enter an AP voucher as follows for the logistics cost:
*Accounts Payable = -4
Logistics Cost ACTUAL = 5 (using separate account, as part of example)
Logistics Estimation GAIN/LOSS = -1 (special purpose account, manual)

If you desire to revalue to the actual, you can go to item maintenance and change overhead portion but will only work if you still have the QOH. If you change the overhead cost of the product to the actual, it will reassess the item cost while generating an "overhead rate variance" (which can be same account as the ESTIMATE, defined in the product line master).

If you do not need (or can't) to do the revaluation (e.g. item doesn't necessarily need to have the actual cost as part of the standard OR
if product is used/sold before the "logistics cost" actual is known, such as if QOH is gone
), then this would be the "only approach". You can handle all this via reports that focus on overhead applied for the product purchased.

In the example above, I used separate accounts for the "reserve" (overhead applied)
and the "actual".
On the long-run will let you know if you are over or under estimating by comparing them. If you use same account for both, then you will then be "clearing" the estimate and should move the difference to an "Actual Gain/Loss of Logistics".

- - - - -

An option using BOMS, that will allow for revaluation, assuming you still have the QOH, is to use one item called "logistics cost" that is included as BOM of your product. The "logistics item" should only have cost in the overhead (not in material). Upon PO receipt, and for any stock on hand, if you revalue the rate (cost) of the "component" and revalue the BOM of the parent, all parents using it will be revalued.

Caveats... The issue here is that the revalue will only apply to QOH (anything you sold/used won't revalue). Also, if next transaction logistics cost changes, then it will revalue any already existing stock.

Revaluing the "component" from a rate of 5 to 4 will do (assuming inventory on hand) when you run BOM Reval:

Inventory = -1 (oh... logistics cost did not cost as much as expected), your product standard will now be 51 (47 + 4).
Material Rate Variance = 1