How to Set Up and Use Landed Cost in QuickBooks Desktop Enterprise

Before you start

• You need an active QuickBooks Desktop Enterprise Platinum or Diamond subscription with Advanced Inventory, and Advanced Inventory has to be turned on.
• Setting it up needs the Admin or External Accountant role, or a role with the Landed Cost permission under Inventory.
• Set up landed cost before you enter the freight and duty bills. Bills entered before the landed cost account existed can't be selected later.
• Intuit says landed cost doesn't convert currencies. Bills in a second currency will leave the totals off.
• Ask your accountant whether the landed cost account should be an Other Current Asset or a Cost of Goods Sold account.

For what each subscription includes, see QuickBooks Desktop Enterprise pricing and What Advanced Inventory adds in QuickBooks Desktop Enterprise.

Step 1: Set up the landed cost account

1. 1Go to Edit > Preferences.
2. 2Select Items & Inventory, then the Company Preferences tab.
3. 3Select Advanced Inventory Settings, then the Landed Cost tab.
4. 4Select Setup landed cost account.
5. 5Create a new account, or choose an existing Other Current Asset or Cost of Goods Sold account.
6. 6Select Save & Continue.

Step 2: Map your shipping and handling items

1. 1On the Landed Cost tab, open the Shipping & Handling items drop-down.
2. 2Choose the items you already use for freight, shipping and similar charges.
3. 3Select Save & Close.

Once an item is mapped to the landed cost account, you can't remove it. If you stop using it, make it inactive instead.

Step 3: Create items for duties and other charges

1. 1Go to Lists > Item List.
2. 2Select Item, then New.
3. 3Set Type to Other Charge and give it a clear name, such as Customs/Duties.
4. 4If This item is used in assemblies or is a reimbursable charge is checked, set Expense Account to the landed cost account. Choose the Income Account you need.
5. 5If that box is clear, set Account to the landed cost account.
6. 6Select OK. Repeat for each kind of charge, such as insurance.

If a bill with one of these items can't be selected later, check that the item is mapped in Step 2.

Step 4: Enter the inventory bill and the charge bills

1. 1Go to Vendors > Enter Bills and enter the supplier's bill for the inventory items.
2. 2Select New and enter a separate bill for the freight or duty, using the charge item from Step 2 or Step 3.
3. 3Enter one bill for each other charge, for example one from the freight carrier and one from the customs broker.

Bill entry itself is covered in how to enter and pay bills. If the goods came in on an item receipt first, see How to receive inventory against a purchase order.

Step 5: Calculate and post the landed cost

1. 1Go to Inventory > Calculate Landed Cost.
2. 2In the Inventory and assembly items section, select Add bill. Choose the inventory bill, then select Add bill again.
3. 3In the Shipping and handling costs section, select Add bills. Choose the charge bills, then select Add bills again.
4. 4Open the Split by drop-down and choose quantity, amount, percentage or S&H cost.
5. 5Select Post to bill.
6. 6QuickBooks offers new selling prices based on your original markup and the landed cost. To change one, select the item, enter the price and select Update & proceed.
7. 7To keep current prices, select Skip & proceed. Select OK when you're done.

Intuit's release notes list an improved Landed Cost Calculator in the November 2024 update to QuickBooks Desktop Enterprise 24.0. Older releases may look different. Intuit's article also shows the price buttons as Update and Skip.

If a bill won't show up in the calculator

• The inventory bill won't calculate: it has no inventory or assembly items, or it's open on someone's screen.
• A charge bill can't be selected: it was entered before the landed cost account was set up, or its item isn't mapped to that account.
• A charge bill also can't be selected while another user is working in it, or once it's allocated to another inventory bill.
• You use Enhanced Inventory Receiving, which keeps item receipts apart from bills: landed cost still works. Every bill shows in the shipping and handling list, and Intuit recommends following the Enhanced Inventory Receiving steps.
• The charges are in a foreign currency: landed cost doesn't convert currencies, so handle those bills with your accountant.

For how QuickBooks values the inventory these costs land in, see average cost vs FIFO in QuickBooks Desktop.

Where QuickBooks Desktop leaves the work to you

• Someone has to enter every freight, duty and broker bill and match it to the right inventory bill.
• Charges that arrive weeks after the goods still need to be matched back to the original bill.
• You pick the split method each time you calculate.
• Selling prices only change if someone accepts or edits the suggested price.
• Foreign currency charges need handling outside the calculator.