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Using an Inventory Cost Template on Items Using Standard Costing

by | Nov 10, 2022 | Suite Guides

The Inventory Cost Template record in NetSuite can be used for items using the Standing Costing method to allow these items to have an additional cost on top of the item’s standard cost to purchase. For example, an item can have a standard cost of $10. On top of this cost, the vendor charges a shipping cost to the item at say 10% of the material cost which is then treated as a capitalizable cost of the item upon receipt. The Inventory Cost Template can be utilized in this scenario to record the $1 cost.

To use and associate an Inventory Cost Template on the above scenario, we can follow the steps below:

Enable Landed Cost feature.

  • Navigate to Setup > Company > Enable Features page > Items & Inventory tab > Inventory section > and mark the Landed Cost checkbox.
NetSuite Inventory Cost Template 1
  • Click Save.

Setup up a Landed Cost category.

  • Navigate to Setup > Accounting > Accounting Lists.
  • Click New.
  • Select Cost Category.
  • In the Cost Category page, set a name for your cost category e.g., Shipping Charge.
  • Set Cost Type to Landed.
  • Set the related expense account for this cost category.
  • Click Save.
NetSuite Inventory Cost Template 2

Create a Landed Cost item.

  • Navigate to Lists > Accounting > Items > New.
  • Select e.g., Other Charge for Purchase.
  • Set name to e.g., Shipping Charge.
  • Set the Cost Category field to the Landed Cost category created in #2 above.
  • In the Overhead Type field set it to % of Material.
  • In the Purchase Price field, set this to e.g., 10.00. This is read as 10% of the material cost as the shipping charge for the item.
  • Set the item’s expense account equal to the expense account used in #2 above.
  • Click Save.
NetSuite Inventory Cost Template 3

Create an Inventory Cost Template.

  • Navigate to Lists > Accounting > Inventory Cost Template > New.
  • Set a name for the Inventory Cost Template e.g., Shipping Cost Charge @ 10%.
  • Populate the Cost Category from #2 and the Landed Cost Item in #3.
  • Click Save.
NetSuite negative inventory

Associate the Inventory Cost Template to your item that uses standard costing.

  • Edit the related item record.
  • In the Purchase/Inventory tab > Location sub-list, populate the Inventory Cost Template created from #4.
  • Click Save.
NetSuite Inventory Cost Template 5

Perform a new standard cost roll up.

NetSuite Inventory Cost Template 6

Create a new inventory cost revaluation for the item.

NetSuite Inventory Cost Template 7

Notice that the new unit cost is as $11.00 which is the Item Default standard cost of the item at $10.00 + $1.00 (10% of the $10.00 standard cost)

Create a Purchase Order for the item for 1 quantity.

NetSuite Inventory Cost Template 8

Receive the item.

NetSuite Inventory Cost Template 9
NetSuite Inventory Cost Template 10

Notice that the GL impact of the Item Receipt recorded an increase or debit to the item asset account or item value at $11.00 ($1.00 + $10.00) and recognized Accrued Purchase (payable) for the rate of the item. A credit was also recorded at $1.00 for the Shipping Charge. This should be offset once a Vendor Bill will be created for the shipping charge.

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