POE COST Control Maintenance Records

The following control maintenance record belongs to the COST area within the POE (Purchase Order Entry) category.

Capitalize Tax On Purchase Orders

For each branch, indicate whether the system should capitalize the purchase order tax by including it in the Landed Average Cost and Landed Last Cost calculations when the branch is the receiving (material) branch for a purchase order. ClosedMore:

Options

  • Yes - Tax capitalization occurs.

  • No - Tax capitalization does not occur.

Outcome of setting this control record

Setting this record to Yes includes the tax amount in the Landed Average Cost for the receiving branch on the purchase order. The Landed Average Cost is calculated using the following formula:

Line Item Tax = [((Line Item Qty * Line Item Cost) / Total Order Cost) * Total Order Tax]

Default Value(s)

No

Example(s)

A purchase order has the following items:

5ea Product ABC $2.00/ea
10ea Product DEF $5.50/ea
20ea Product XYZ $3.75/ea
Total Extended Cost: $140.00
Total Order Tax: $20.00

The line item tax included in the Landed Average Cost calculation is determined as follows:

Product ABC = ((5 * 2.00) / 140.00) = 0.071 (20.00 * 0.071) = $1.42 Tax
Product DEF = ((10 * 5.50) / 140.00) = 0.392 (20.00 * 0.392) = $7.84 Tax
Product XYZ = ((20 * 3.75) / 140.00) = 0.535 (20.00 * 0.535) = $10.70 Tax

The total tax amounts calculated for each line item will then be divided by the quantity ordered and added to the cost (per ea) for the product to get the cost that will be used in calculation of the Landed Average Cost:

Product ABC Cost = (1.42 / 5) = $0.284 + $2.00 = $2.28
Product DEF Cost = (7.84 / 10) = $0.784 + $5.50 = $6.28
Product XYZ Cost = (10.70 / 20) = $0.535 + $3.75 = $4.29

Action if set to Null

Same as if set to No.

Additional Information

This record does not apply to direct purchase orders, as those orders do not change Landed Average Cost and Landed Last Cost because the material does not come to your warehouse.

You can override this record for each vendor using the Capitalize Tax on Purchase Orders field in the Additional Vendor Information window.

Use P/O Cost on Central P/O Transfers

Set to Yes to use the purchase order cost of the original order on central purchase order transfers. If set to No, the system uses the Use P/O Cost on Central P/O Transfers value set at the buy line level.