On Cost Code
The On-cost code can be alpha or numeric.
For details on the use of “codes”, see The Role of “Codes” in Online Advantage
On Cost Name
Enter text to describe the On Cost code. This appears when selecting an on-cost to add to shipment costs.
For more details on descriptions, see The Role of “Names & Descriptions” in Online Advantage
Default Allocation Method
Select the default allocation method. The selected option is then used as the default allocation method used in the shipment costing routines to calculate on-costs during purchase receipt.
There are 6 allocation methods available each is explained below:
1. Manual
Manually allocating on-costs is what the name suggests – manual. The user will enter an on-cost value for every item of a shipment during the costing process. This means that you manually calculate the on-cost value externally to Online Advantage and key it in for each item received on a shipment.
2. Quantity
The Quantity method will use the receipt quantity as a way to apportion an on-cost estimate or actual figure across the items on a shipment. The total value relating to this on-cost code would be entered, and the costing procedure would then allocate the value proportionally based on the shipment receipt quantity of each line item e.g. a shipment with three-line items would calculate the on-cost allocation as follows:
- item 1 – receipt quantity 10 – calculated on-cost value = 10%
- item 2 – receipt quantity 20 – calculated on-cost value = 20%
- item 3 – receipt quantity 70 – calculated on-cost value = 70%
3. Value
The Value method will use the receipt value (receipt quantity by purchase price) as a way to apportion an on-cost estimate or actual figure across the items on a shipment. This method is particularly useful when dealing with costs like insurance that are calculated based on the value of the goods being shipped.
The total value relating to this on-cost code would be entered, and the costing procedure would then allocate the value proportionally based on the shipment receipt value of each line item e.g. a shipment with three-line items would calculate the on-cost allocation as follows:
- item 1 – receipt value 100 – calculated on-cost value = 10%
- item 2 – receipt value 200 – calculated on-cost value = 20%
- item 3 – receipt value 700 – calculated on-cost value = 70%
4 & 5. Volume & Weight
The Volume or Weight of line items on a shipment can also be used to apportion on-cost values across a shipment being costed. The basic assumption here is that the products have an entry for volume or weight for items on the shipment, and that these are all in the same unit of measure. The allocation calculation is similar to the previous ‘Quantity’ and ‘Value’ proportional approaches but uses the receipt quantity by weight/volume for each line item.
This method is particularly useful when dealing with costs like freight that are calculated based on the “dimensions” of the goods being shipped.
Note the system will warn the user during shipment costing if the shipment has weights or volumes for some items but not for all items being received. The costing procedure then calculates the value of a given on-cost for each item on the shipment based on its volume or weight.
6. Fixed Percentage
The Fixed Percentage method of allocating on-cost values is extremely useful where the costing user does not have a value for a given on-cost but has an estimated percentage of the value of the item being shipped to work with. i.e. if it is known that the on-costs will be approximately 5.5% of the value of a particular type of goods being received then the fixed percentage method is a way to calculate the value of the estimated on-cost automatically. The system will calcuate 5.5% of each item on the shipment and accumulate that as the total on-cost value for that on-cost code on the shipment.
This method is different to the others in that it does not require the upfront nomination of a total on-cost value for a shipment. Rather, it calculates this value based on the percentage recorded on the on-cost code at the time of costing.
Allocation Rate
This is only required to be entered if the ‘Fixed Percentage’ allocation method if selected as the default allocation method. Enter the default allocation rate to 2 decimal places. Note that this rate can be overridden during an actual shipment costing as needed.