What is Landed Cost Management?
Landed Cost Management Helps a Company to record and analyze the accurate cost break up of a purchased item. This is done by adding the shipping, insurance, handling, taxes, and storage cost of the item.
What was happening before LCM?
Before LCM all the Additional Cost such as transportation or handling where added to Material Overhead account. The overheads cannot be vendor or shipment specific. Overhead Rates are same Regardless of Shipping Point and Receiving Points.
What Happens in LCM?
LCM Provides More Control to Estimate and Accrue the Additional Cost for Specific Shipments. LCM uses information from PO along with formulas in advanced pricing to add cost factors such as Freight, Tax, Insurance, and Handling. The Cost can be applied to a Specific Item in a Shipment (Customs Duty) or the Entire Shipment (Freight).
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