• Registered: 09/29/2011
  • Posts: 15

Topic: Can shipping/freight contribute to Cost of Goods Sold?

Is there any way to associate freight costs of a supplier purchase with the COGS of items within that purchase?

For example, buy 10 items at $10 each, but shipping costs $20, so COGS should = $12 per unit.

From what I understand in a previous post (https://frontaccounting.com/punbb/viewtopic.php?id=1440) this is not possible, but want to make sure it's still the case.  And if it's not possible, can anybody explain to me what the user 'sannyferns' means in this previous post (6th post).  He apparently has a work around to the issue, but I don't quite understand it.

For me, the work around would be entering a unit cost of $12, or whatever it is next time, into FA.  But this has the disadvantage of having to predetermine the COGS outside of FA each time a suppler purchase is made, as well as loosing the ability to record purchasing prices in FA (since they are now item+S&H prices).

  • joe
  • Administrator
  • Offline
  • Registered: 03/15/2007
  • Posts: 5,106

Re: Can shipping/freight contribute to Cost of Goods Sold?

As you have pointed out, there is no work around for incorporating the shipping cost into COGS. You could, of course, set the shipping cost to goto COGS GL account. But you would never having this getting into the cost price of the items.
In that case you will have to do that manuelly, as you point out.

/Joe

  • Registered: 09/29/2011
  • Posts: 15

Re: Can shipping/freight contribute to Cost of Goods Sold?

It's not so important to me that the shipping costs be represented in the COGS of an item, but just that the appropriate amounts are credited and debited to the inventory and COGS accounts when a sale is made, without requiring additional manual entries to the GL.  Is there any way to implement your suggestion (enter shipping costs into accounts separately from item costs) but have it happen automatically when a sales order is completed?  I wouldn't want to have to manually credit the inventory account to the COGS account every time an order comes in just to handle shipping costs.

  • joe
  • Administrator
  • Offline
  • Registered: 03/15/2007
  • Posts: 5,106

Re: Can shipping/freight contribute to Cost of Goods Sold?

There are so many ways you can set this up, so I have generally no idea on how you whould do this. Maybe an accountant can help.

/Joe