Landed cost combines the purchase price of goods with the relevant costs of bringing them to their intended location and condition. It may include freight, duties, cargo insurance and handling. Identify what the supplier price already includes and which charges arrive separately before calculating a per-unit amount.
For a buyer comparing suppliers or updating item economics, the aim is a consistent acquisition-cost comparison. An operational estimate is not automatically the final inventory valuation: finance determines which costs qualify under the applicable accounting policy.
Landed-cost formula
Shipment cost pool = goods purchase cost + eligible additional acquisition costs
Item landed unit cost = (item purchase cost + allocated additional costs)
/ corresponding item quantity
Use the same currency and compatible units. For a single homogeneous shipment received in full, dividing total cost by its received units is straightforward. A mixed shipment requires allocation. A partial receipt, damaged goods, returns or a later freight invoice requires an explicit policy for quantities and costs rather than blindly dividing the full PO cost by the first receipt.
Under IFRS, IAS 2 includes purchase, conversion and other costs of bringing inventory to its present location and condition. Apply the framework relevant to your business. Recoverable taxes, financing charges and selling expenses should not automatically be included simply because they appear on a payment or invoice.