Account for Item Cost purchased in Vendor A with additional cost from Vendor B where quantity is deducted from Inventory upon shipment to Vendor B

User is wanted to get the total cost of an Item which was purchased from Vendor A.  They then need to ship the Item to Vendor B for additional costs/components.  The shipment of the Item will be counted as a deduction to the on hand quantity.  Vendor B then will ship the item back after adding additional components.  Shipping the item back will restock the item to the Inventory.  Both Vendors will Bill the user separately.

 

Here are the steps to do that:

 

Landed Cost feature needs to be enabled for this.

1.       Enabled Landed Cost in Setup > Company > Enable Features

2.       Set Landed Cost Category in Setup >Accounting > Accounting Lists > Cost Category

3.       Create New Cost Category using example Miscellaneous Expense as the Expense Account

4.       Go to the Item Record and make sure that Track Landed Cost is marked

5.       Create Other Charge for Purchase Item and set the Purchase Price, Set Expense Account to Miscellaneous Expense (Expense Account of Cost Category)

 

6.       Create a Purchase Order for Vendor A > navigate to Transactions > Purchases/Vendors > Enter Purchase Order

7.       Set the Vendor Name, Location and enter the Item with Landed Cost.

8.       Set Landed Cost Category > Save

 

9.      Create a standalone Bill for Vendor B using Other Charge for Purchase item and set Landed Cost Category

10.   Go back to the Purchase Order of Vendor A and click Receive

11.   On the Item Receipt page > go to the Landed Cost tab

12.   Set Cost Allocation Method = Quantity

13.   Source = Other Transaction open the list and select the Bill created

14.  Hit Save

15.   Bill the Purchase Order

 

To record the shipment of the item for additional cost:

1.       Create a Location to be used specifically for this process. Navigate to Setup > Company > Locations > New

 

2.       Record the reduction of the quantity by creating Inventory Transfer from the exiting Location to the new Location created

3.       Navigate to Transactions > Inventory >Transfer Inventory

4.      Set From Location to the existing location of the item. Set To Location to the new location created

5.       Enter the Item and set quantity to transfer equal to the quantity of the Purchase Order

6.       Hit Save

 

To record the shipment of the item back to the warehouse, need to create Transfer Order

1.       Navigate to Transactions > Inventory > Enter Transfer Order

2.      Set From Location to the new location created

3.       Set To Location to the Warehouse Location

4.       Set Transfer Price equal to the amount of the Bill created to Vendor B

5.       Approve the Transfer Order and hit Fulfill

6.       Process the Item Fulfillment

7.       Go back to the Transfer Order and process Item Receipt

8.       Save the Item Receipt.

 

The Item Receipt will put the item back to the correct location and the item record now has the updated cost.