more-arw search

Q&A Forum

Freight-In: best way to flow through Inventory & Cogs.

We pay for freight in to our warehouse. The amounts are relatively small vs. our other shipping costs and we have been going directly to the P&L with the items historically, but below the line. I first want to a) make sure we move the costs above the line and b) if we don't simply charge in-period on the basis of materiality, develop a sound basis for expensing over time. I am currently thinking of using inventory turnover as a basis for this (on average 3 months). Our outside accountant proposed % of current month items shipped / inventory. Seems similar but different.

Answers

Anonymous
(Finance Director) |

Since you say your inbound freight costs are relatively low, I wouldn't worry about putting any more accuracy into your inventory/COGS. It doesn't seem to me that the accuracy will buy you anything. What I would do: make sure that your buyers are including freight costs in their purchase analysis. You may find some suppliers offer "free" or much lower cost freight than others, and you want to be sure you are making buying decisions on an apples-to-apples basis.

1388 views
Topics

Get Free Membership

By signing up, you will receive emails from Proformative regarding Proformative programs, events, community news and activity. You can withdraw your consent at any time. Contact Us.

Business Exchange

Browse the Business Exchange to find information, resources and peer reviews to help you select the right solution for your business.

Learn more

Contribute to Community

If you’re interested in learning more about contributing to your Proformative community, we have many ways for you to get involved. Please email content@proformative.com to learn more about becoming a speaker or contributing to the blogs/Q&A Forum.