> For the complete documentation index, see [llms.txt](https://docs.rmhpos.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.rmhpos.com/store-manager/configure-pos-and-store-manager/inventory-and-purchasing/calculating-landed-cost.md). # Understanding landed cost You can set up Store Manager to automatically calculate the **landed cost** for each item received through purchase orders and inventory transfers. The landed cost of an item is the sum of the item's cost, tax, shipping, applicable charges, and other fees. There are three **cost distribution methods** available for calculating the landed cost: Quantity, Value, or Manual. ## Scenario Your store marks a purchase order as received. The purchase order contains two wireless headphones ($30.00 each) and two wireless mice ($20.00 each). They are received at a tax rate of 10 percent. There are charges of $20.00 and tax on those charges is 10 percent. ## Quantity In this method, charges and tax on charges are equally divided by the total number of units received.

Values	Calculations	Headphones	Mice
Quantity received		2	2
Cost per quantity		$30.00	$20.00
Extended cost	[cost per qty \* qty received]	$30.00 \* 2 = $60.00	$20.00 \* 2 = $40.00
Tax	tax on cost per qty	10% of cost per qty ($30.00) = $3.00	10% of cost per qty ($20.00) = $2.00
Charge per quantity	[total charges / total qty received]	$20.00 / 4 = $5.00	$20.00 / 4 = $5.00
Tax on charge	tax on charge per qty	10% of charge per qty ($5.00) = $0.50	10% of charge per qty ($5.00) = $0.50
Landed cost	(cost per qty+ tax + charge per qty + tax on charge)	($30.00 + $3.00 + $5.00 + $0.50) = $38.50	($20.00 + $2.00 + $5.00 + $0.50) = $27.50
Extended landed cost	landed cost \* qty received	$38.50 \* 2 = $77.00	$27.50 \* 2 = $55.00

## Value In this method, charges and tax on charges are calculated as follows: * Charges = \[(total charge) / {(per unit cost of headphones \* quantity of headphones received) + (per unit cost of mice \* quantity of mice received)}] \* per unit cost of headphones

Values	Calculations	Headphones	Mice
Quantity received		2	2
Cost per quantity		$30.00	$20.00
Extended cost	[cost per qty \* qty received]	$30.00 \* 2 = $60.00	$20.00 \* 2 = $40.00
Tax	tax on cost per qty	10% of cost per qty ($30.00) = $3.00	10% of cost per qty ($20.00) = $2.00
Charge per quantity	(total charge / (cost per qty \* qty received + cost per qty \* qty received)) \* cost per qty	($20.00 / ($30\2 + $20\2)) \* $30 = $6.0	($20.00 / ($30\2 + $20\2)) \* $20 = $4.0
Tax on charge	tax on charge per qty	10% of charge per qty ($6) = $0.6	10% of charge per qty ($4) = $0.4
Landed cost	(cost per qty+ tax + charge per qty + tax on charge)	$(30.00 + 3.00 + 6.00 + 0.6) = $39.60	$(20.00 + 2.00 + 4.00 + 0.4) = $26.40
Extended landed cost	landed cost \* qty received	$39.60 \* 2 = $79.20	$26.40 \* 2 = $52.80

## Manual In this method, you enter the charges and tax on charges for each item manually. The quantity received must be greater than zero. Charges and tax on charges are calculated as follows: * Charge = Sum of extended charges on the Charges tab * Tax on charge = Sum of extended tax on charges on the Charges tab

Values and Calculations	Headphones	Mice
Quantity received	2	2
Extended charge	$10.00	$20.00
Charge = extended charge / quantity received	$10.00 / 2 = $5	$20.00 / 2 = $10
Extended tax on charge	$2.00	$4.00
Tax on charge = extended tax on charge / quantity received	$2 / 2 = $1	$4 / 2 = $2

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