Landed Cost Accounting Guide for Importers Using Sage 100
For importers, the vendor invoice price is only part of the true product cost. Here's how landed cost accounting works in Sage 100, and why it matters for margin reporting.
For businesses importing goods — common throughout Southern California's distribution sector — the price paid to a supplier is rarely the full cost of getting that product onto a warehouse shelf. Landed cost accounting captures the rest.
What Counts as Landed Cost
Landed cost typically includes freight (ocean, air, or trucking), customs duties and tariffs, customs brokerage fees, and sometimes insurance and inland transportation. These costs are incurred at the shipment or purchase order level but need to be allocated down to individual inventory items to get an accurate per-unit cost.
Why This Matters for Margin Reporting
If landed costs aren't allocated into inventory cost, margin reports based on vendor invoice price alone will overstate gross margin — sometimes significantly, depending on freight and duty rates. This is one of the most common sources of inaccurate margin reporting we see in importer environments.
Allocation Methods
Landed costs can be allocated to items based on weight, volume, value (pro-rata to invoice cost), or unit count, depending on which method best reflects how the actual costs were incurred. The right method depends on the nature of the shipment — a container of mixed high- and low-value goods might allocate freight differently than duty, for example.
Configuring Landed Cost in Sage 100
Sage 100 can be configured to capture landed cost at the purchase order or receipt level and allocate it into inventory cost using the methods above, so that inventory valuation and COGS reflect true product cost. This requires upfront configuration decisions about which cost types apply and how they should be allocated — done incorrectly, it can create reconciliation issues between AP and inventory.
Lot Tracking and Landed Cost Together
For food, beverage, and other regulated importers, landed cost configuration often needs to work alongside lot tracking, so that cost and traceability are both accurate at the lot level. See our food importer case study for an example of this combined configuration.
Can Sage 100 calculate landed cost for imported goods?
Yes. Sage 100 can be configured to capture freight, duty, and other landed costs at the purchase order or receipt level and allocate them into inventory cost using weight, volume, value, or unit-based methods — giving importers accurate per-unit cost and margin reporting.
Related Services
This topic connects directly to our core service areas: Sage 100 Distribution, Sage 100 Inventory Management, Wholesale Distribution ERP, and Reporting & Analytics. If you're working through a similar challenge, contact us for a free consultation.
