For me i think whatever way is okay, so long as the expenses end up on the inventory. Some of the cost can be linked directly to some inventory items whiles others are general. maybe the upcoming function to link these costs to inventory can be made to allow the user to link a line of expenses to a particular inventory type or spread the cost on the inventories using the amount weight or the quantity as weight.
@lubos, i just realised that you have made it possible to add the inventory cost to the items, cool.
I however have some questions.
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If i am purchasing 50 different inventory items from a supplier and i want to spread other purchasing cost to the inventory, must i create a different line for every item just to add that cost to the inventory? I was expecting that, we will rather be able to select an expense account and but tell manager that it should rather add it to the cost of inventory instead of debiting the expense account by spreading it on the inventories using the weight of the amounts like the example @devan gave earlier
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Will there be the possibility to add expenses to inventory which are not meant to appear on the purchase invoice? e.g the cost of hiring a vehicle to carry inventory into the warehouse which the supplier doesn’t have anything to do with.
I can use journal entry for this but just want to know if t possible.
This feature is also coming.
If you have received another purchase invoice to delivery items from 3rd party, you can now allocate the cost to that inventory item without increasing quantity.
Or you can always use journal entries for now.
Okay thank you Sir
The latest version (16.1.55) contains new inventory item called Freight-in which will allocate the cost proportionally across other inventory items on purchase invoice.
See: Manager Cloud
Thanks. As someone who uses Manager primarily for Inventory management and Expense tracking, I very much appreciate this wonderful new feature.
Is there some reason why its necessary to have delivery fees linked to inventory items rather than using a delivery fees expense account. What I do is when buying from supplier is allocate delivery costs to my delivery fees expense account and when I am selling the goods I charge the client a delivery fee and allocate it to the sales account with a tracking code for delivery fees. I will be moving from tracking codes to sub accounts so I will probably have it in sales - delivery fees!
By doing it the way I am doing it, I can see how much I spend on delivery fees and how much I make on delivery fees as I frequently order for more than one client from a supplier, so I get one delivery fee from supplier! I cannot see how linking to inventory items makes any difference? I am probably just using delivery fees in a different way, which would account for why I don’t follow the point of linking inventory item to delivery fees.
From reading the various comments on the subject, it appears that many have a unique way of handling Freight-in expense. The latest update seems to give users the flexibility to handle this expense in the way that best suits their business type.
For tax purposes, some will list it as a separate expense (Sch C, Line 39) while others will add it to the cost of the purchased products or materials. Either way, it is part of the COGS. I prefer the latter method since it allows me to more accurately determine the true cost of the products I manufacture. Depending on the manufactured item, I might use various amounts of multiple raw materials. The new Freight-in option helps me determine my exact cost and the best selling price.
current Financial reporting standards like the FASB and IFRS (IAS 2 inventories) prescribe that inventory freight cost be added to the inventory cost to correctly reflect the cost of obtaining the inventory…
Measurement of inventories
Cost should include all: [IAS 2.10]
costs of purchase (including taxes, transport, and handling) net of trade discounts received costs of conversion (including fixed and variable manufacturing overheads) and other costs incurred in bringing the inventories to their present location and condition.
Interesting. I think that I am seeing that where manufacturering comes into play, it makes sense to allocate delivery costs to the costs of the inventory.
I tend to charge a delivery fee to the client regardless of whether I paid a delivery fee, because I have to go and pick up the goods from my receiving office. So for me, allocating to inventory cost makes no sense. But all businesses differ!
The focus has been the allocation of freight-in costs to inventory, but I just noticed something when adding a new Purchase Invoice. The invoice contained 5 inventory items and 2 office expense items. However, using the Freight-in option, the proportional Freight-in costs incurred by the 2 expense items were distributed among the 5 inventory purchases and none to the expense items.
I think that is the correct thing to do. Freight in and inventory are Cost of Sale expense and must be deducted to arrive at Gross Profit. office expenses are however deducted to arrive at Net profit.
I agree with all points - Inventory and associated Freight-in costs are both part of the Cost of Goods Sold and Office supplies are deducted as Expenses. But in this situation, my one purchase invoice included both inventory and expense items. However, the Freight-in cost for the total invoice was allocated only to the inventory items. No freight was charged to the two expense purchases. I was expecting that it would be proportionally divided among each item in the invoice.
I am using the work around [ Accounting Cost of Goods Sold and Inventory Item Cost - #25 by Kobus]
It is working for me untill you have solved the problem with the COGS as mentioned before. If I am correct, it should be next referring to [ Free Accounting Software | Manager]
freight-in. The shipping cost to be paid by the buyer of merchandise purchased when the terms are FOB shipping point. Freight-in is considered to be part of the cost of the merchandise and should be included in inventory if the merchandise has not been sold.
Freight can be added only on inventory or fixed asset procured
Freight-in inventory item will spread the cost across other inventory items only. If you have some other expenses on invoice which should be inflated by freight-in cost, you need to manually increase amounts of those items and then appropriately decrease Freight-in amount so the total purchase price is still what you see on invoice.
Hi,
Sorry, I am very new in using manager.io. I am using cloud version. I don’t see a ‘Freight-in’ option while creating new purchase invoice. How can I use the feature of allocating the cost proportionately across the inventory items? Find below is the screenshot that doesn’t show Freight-in option.
please find below for link