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Add freight-in to inventory item costs

Freight-in represents the cost of obtaining goods from a supplier. This obviously includes transportation and shipping costs, but could also include handling and brokerage fees, customs charges, and so forth, as long as you do not need to record those as expenses in separate accounts. For typical accounting purposes, freight-in is added into the cost of goods, just as though the supplier charged a higher price.

Example
Northwind Traders purchases 100 units of an inventory item at a unit price of $4.00. Northwind’s supplier adds a shipping charge of $20. The fully delivered average cost of the items is not $4.00, but $4.20.

Manager provides two methods for entering freight-in costs:

Manual allocation

To manually allocate freight-in costs to an inventory item, add a separate line item to a purchase invoice or cash payment form. Choose the same inventory item, but leave the Qty field blank:

The freight-in cost will be added to the average cost of the item without affecting the quantity on hand:

Notes
Manual allocation is the only method available for cash payments. It should also be used whenever freight-in costs of separate inventory items can be determined independently, such as when shipped separately by the supplier.

Manual allocation should also be used when freight-in costs are separately identifiable for different inventory items. Just add multiple line items and allocate the separate freight-in costs to their appropriate inventory items.

Automatic freight-in distribution to a single item

Freight-in can also be added to inventory cost by adding a line item and selecting Freight-in in the Item field. As for manual allocation, leave the Qty field blank (not the default quantity):

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Results are identical to the manual allocation method.

Automatic freight-in distribution to multiple items

If you record the purchase of multiple inventory items on the same purchase invoice, you do not need to manually calculate the freight-in cost per inventory item. Instead, add a line item and select Freight-in in the Item field. As for manual allocation, leave the Qty field blank (not the default quantity):

Manager will allocate the freight-in cost proportionally (based on total amounts) to all inventory items purchased:

Caution
Be sure to edit the Freight-in line item so Qty is blank, not zero, or no amount will be calculated and no freight-in cost will be apportioned to the inventory item(s).

Entering separate freight-in invoices

When freight-in charges are billed by and paid to different suppliers than the inventory item, separate payment forms or purchase invoices are required. Examples include:

For these situations, use the manual allocation method, choosing the inventory item but leaving Qty blank. You do not need to consolidate these separate charges on the same transaction form as the inventory item purchase. Average inventory item costs will still be calculated correctly.

Nor do you need to list the same date on forms for the purchase and freight-in. Average cost will be adjusted as of the transaction date entered for the freight-in charge.

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