There seems to be some confusion on how baan works when related to freight on purchased items. Can you help to clear up some of the confusion?

An example is that we ordered some perlite (which is a raw material used in making product). A girl in our office created a provision linked to the item master to take in freight charges and surcharges.

The cost of the product is .3420 cents per lb. Additional, the freight cost is $195.00 for 2 pallets (1800 lbs) or approximately .10 per pound.


My question is: By creating the provision for the item, does this eliminate the need for adding the freight into the cost of the product on the line item?

My concern is that if we added freight to the purchase order in addition to the provision, it would do a double entry on the standard cost of the item. Instead of the line item of product being .3420 cents per lb., the adjusted price would be .4420 cents per lb. on the purchase order and then when it is goods received, it would increase the cost to .4420 plus add the provision from the freight account. Is that correct?


The second question I have is: What session do I use to view if a provision has been created for an item master purchased item or where can I view this when creating the purchase order so I would know if a provision needs to be created or not?

Any help is appreciated. Thank you.

Hi Newbie:

You are absolutely correct.
Purchased and cost items are differently handled. On the Purchased Item (Perlite) Raw Material--A provision for freight, fuel, pallet etc. fees is created---No need to put line item on p.o. because this would increase base cost. When the goods receipt is done--you are receiving base cost of what was quoted. When invoice is paid, accounting is to book the freight etc. against the provision created for the raw material. You an view if a provision has been created by going to session ticpr1430m000 and entering the item master in.

When freight is associated with cost (Expense) Item---you put a line item on the purchase order and do the goods receipt against the expense GL (OR ) if you business is set up with just a freight expense GL -- then a PEX in accounting would be done directly against the freight expense. Hope this helps