Replacement/Landed Cost Calculation
The first section of this document provides an explanation of the calculations used to determine new Landed Costs based on the Calculation Method and Cost Base combination defined in Maintain Purchasing Tables (PO09/Landing Factors).
The second section puts the theoretical calculations into a practical example. If you would like to go directly to the example, click here.
Section 1: Explanation of the Calculation Methods
 Weight's Rate:
Selecting a Landing Factor that is based on the Weight's Rate Calculation Method will only have an impact on the Landed Cost if a 'Weight' is entered for the Master Carton (Actual) in Enterprise 5.0 or if a 'Weight' is entered on the detail line of the GTIN flagged as 'Default Costing' in Enterprise 5.1 and higher.
Here is an example: the Landed Cost for a Product is $77.02, the Duty is 1% and the $Rate is defined as $3.00. The Quantity of the Master Carton is based on the Inner Qty/SKU Qty and in this example is 1 and the Weight is 9 lbs. If you select a Landing Factor that has a Calculation Method of Weight's Rate, the following calculation is used to determine the new Landed Cost:
Weight * $rate = Weight's Rate Value
9 * 3 = 27 (in US$)
The Additional Cost to be added to the Landed Cost is calculated as:
Weight's Rate Value * Exchange Rate = Domestic Weight's Rate
(27 * 1.511113) = 41.21 (you must convert to Domestic currency because Duty is calculated on Domestic value)
The Weight's Rate is calculated as:
[(Domestic Weight's Rate * Duty) + (Domestic Weight's Rate)] / Quantity of the Master Carton (Actual) of 'Default Costing' GTIN
[(41.21 * 0.01) + 41.21] / 1 = 41.6221
To determine the new Landed Cost:
Original Landed Cost + Weight's Rate Calculation
77.02 + 41.6221 = 118.64
The new Landed Cost is $118.64
 Cube's Rate:
Selecting a Factor that is based on the Cube's Rate Calculation Method will only have an impact on the Landed Cost if Volume is entered for the Master Carton (Actual) in Enterprise 5.0 or if a 'Volume' is entered on the detail line of the GTIN flagged as 'Default Costing' in Enterprise 5.1 and higher.
Here is an example: the Landed Cost for a Product is $77.02, the Duty is 1% and the $Rate is defined as $2.50. The SKU Quantity entered for the Master Carton (Actual)/GTIN flagged 'Default Costing' is 1 and the Volume is 72.33 CuFt. If you select a Factor that has a Calculation Method of Cube's Rate the following calculation is used to determine the new Landed Cost:
Volume * $Rate = Cube's Rate Value
72.33 * 2.5 = 180.83 (in US$)
The Additional Cost to be added to the Landed Cost is calculated as:
Cube's Rate Value * Exchange Rate = Domestic Cube's Rate
180.83 * 1.511113 = 273.25 (you must convert to Domestic currency because Duty is calculated on Domestic value)
The Cube's Rate is calculated as:
[(Domestic Cube's Rate * Duty) + Domestic Cube's Rate] / SKU Quantity (for the Master Carton (Actual) or for the GTIN flagged 'Default Costing')
(273.25 * 0.01) + 273.25 / 1 = 275.98
To determine the new Landed Cost:
Original Landed Cost + Cube's Rate Calculation
77.02 + 275.98 = 353.00
The new Landed Cost is $353.00
 Unit's Amount:
Selecting a Factor that is based on the Unit's Amt Calculation Method will have an impact on the Landed Cost based on the Quantities entered in the 'From Purchasing Unit' and 'To Stock Keeping Unit' in the Conversion Factor section on the Purchasing folder.
Here is an example: the Landed Cost for a Product is $77.0285, the Duty is 1% and the $Rate is defined as $3.00. The Quantity entered for the Purchasing Unit is 1 and the Stock Keeping Units are set to 12. If you select a Factor that has a Calculation Method of Unit's Amount, the following calculation is used to determine the new Landed Cost:
Purchasing Unit * $Rate = Unit's Amount Value
1 * 3 = 3
The Additional Cost to be added to the Landed Cost is calculated as:
Unit's Amount Value * Exchange Rate = Domestic Unit Amount
3 * 1.511113 = 4.533339 (you must convert to Domestic currency because Duty is calculated on Domestic value)
The Unit's Amount is calculated as:
[(Domestic Unit's Amount * Duty) + Domestic Unit's Amount] / To Stock Keeping Units
[(4.533339 * 0.01) + 4.533339] / 12 = 0.38155
To determine the new Landed Cost:
Original Landed Cost + Unit's Amount Calculation
77.0285 + 0.38155 = 77.4101
The new Landed Cost is $77.4101
 Value %:
Selecting a Factor that is based on the Value % Calculation Method will have an impact on the Landed Cost based on the Cost Base selected in PO09.
Example 1: Cost Base selected is 'Purchase Price'
The current Landed Cost is $76.26 and the Percentage Rate entered is 3%. If you select a Factor based on Value's % and use the Purchase Price as the Cost Base, the following calculation is used to determine the new Landed Cost:
Current Landed Cost * Percentage Rate = Purchase Price Value
76.26 * 0.03 = 2.28
Purchase Price Value + Original Landed Cost = new Landed Cost
2.28 + 76.26 = $78.54
The new Landed Cost is $78.54
Example 2: Cost Base selected is 'Value for Duty'
The Duty selected on the Pricing Info folder will increase by the percentage entered in the $Rate/Pct field. If you select a Factor based on Value's % and use Value for Duty as the Cost Base, the following calculation is used to determine the new Landed Cost:
Current Duty + Percentage Rate = Value for Duty Factor
0.03 + 0.03 = 0.06 or 6%
To determine the new Landed Cost:
(Purchase Price  Discount) * Exchange Rate = Domestic Price
(50.47  0) * 1.511113 = 76.2658
[(Domestic Price * Value for Duty Factor) + Domestic Price] = New Landed Cost
[(76.2658 * 0.06) + 76.2658] = 80.84
Example 3: Cost Base selected is 'Duty Paid Value'
The Landed Cost is increased by the percentage entered in the $Rate/Pct field. If the Landed Cost is $76.26 and a 3% is entered, the following calculation is used to determine the new Landed Cost:
Current Landed Cost * $Rate/Pct = Duty Paid Value Factor
76.26 * 0.03 = 2.29
To determine the new Landed Cost:
Current Landed Cost + Duty Paid Value Factor = new Landed Cost
76.26 + 2.29 = 78.55
The new Landed Cost is $78.55
Note: If the 'In FOB' field is selected in any of the examples listed above, not only is the Landed Cost affected, but the FOB cost is also affected.
Section 2: Example of Replacement Cost Calculation
The following example demonstrates the calculation of the Replacement Cost for a Product purchased in Hong Kong dollars and landed in Canadian dollars. The example is for one unit received and includes Landing Costs calculated using various calculation methods, cost bases and exchange rates.
PO13/Cost Factors is set up as outlined in the screen capture below:
^{PO13 Cost Factors Set Up}
The Example is based on the following assumptions:
 The Exchange Rate on Hong Kong dollars to Canadian dollars is 0.14.
 The Domestic Net Purchase Price is calculated as:
(Purchase Price (in HK$) * Exchange Rate)  Purchase Discount
(HK$12,000.00 * 0.14)  20%
1680.00  20% = 1344.00
The following table displays how the Landing Factors are calculated for this example (the screen capture defines the details of each Landing Factor):
Landing
Factor: 
Calculated As:

Domestic Equivalent
(Can$) per SKU 
INFRGHT
Inland Freight 
CAN$.40 / lb x 75 lbs 
30.00 
OCFRGHT
Ocean Freight 
US$3.00 / CuFt x 1.12 exchange x 27 CuFt 
90.72 
PACKAGE
Packaging 
US$10.00 / unit x 1.12 exchange 
11.20 
BROKER
Brokerage 
1% of Value for Duty (1355.20)
Note: Base 2 (Value for Duty) is calculated as:
1344.00 + 11.20 (Packaging) = 1,355.30 
13.55 
DUTY 
6% of Value for Duty (1355.20)
Note: Base 2 (Value for Duty) is calculated as:
1344.00 + 11.20 (Packaging) = 1,355.30 
81.31 
INSURANCE 
.25% of Duty Paid Value (1436.51)
Note: Base 3 (Duty Paid Value) is calculated as:
1344.00 + 11.20 (Pckg) + 81.31 (Duty) = 1,436.51 
3.59 
The Replacement Cost is the Domestic Net Purchase Price PLUS each of the Landing Factors:
Domestic Net Purchase Price 

$1344.00 
Infrght 

30.00 
Ocfrght 

90.72 
Package 

11.20 
Broker 

13.55 
Duty 

81.31 
Insurance 

3.59 
Replacement Cost 

$1574.37 
Here are some additional details on each of the Landing Factors used in the example:
Additional Information:
