cost calculation

[Former Member]

hi,

1) handling charges cost (plant to port) = its cost is independant from net value, which means the charges cost is not based on sales item value, correct?

2) local freight (like from city A to city B in the same country) = its cost is independant from net value, which means the freight cost is not based on sales item value, correct?

3) sea/air freight which is on CIF term, which means i am a seller who needs to bear the freight. the freight cost is based on sales item value?

4) sea/air freight which is on FOB term, which means i am a seller who no needs to bear the freight cost?

thanks

[Lakshmipathi]

You have not mentioned what exactly you want. Please let us know clearly your requirement.

thanks

G. Lakshmipathi

[Former Member]

hi,

i just want to know the normal practice of the condition maintenance in va01.

1) handling charges cost (plant to port) = its cost is independant from net value, which means the charges cost is not based on sales item value, correct?

2) local freight (like from city A to city B in the same country) = its cost is independant from net value, which means the freight cost is not based on sales item value, correct?

3) sea/air freight which is on CIF term, which means i am a seller who needs to bear the freight. the freight cost is based on sales item value?

4) sea/air freight which is on FOB term, which means i am a seller who no needs to bear the freight cost?

thanks

[Lakshmipathi]

Please find below my response in seriatim

1) Generally, handling charges will be based on the volume of the cargo which would be in cbm, kgs, tonnes etc and not on the value. Especially, since you are asking plant to port which is applicable for export sales, the majority of the export cargoes volume would be in cbm

2) Local freight is based on the distance that you are transporting the goods from the origin place to destination. Here also, volume of the cargo will be considered. Of course, there are few exceptions that based on the shipment value, transportation charges will be debited by the transporter

3) The term CIF will be used in export sales where the exporter will raise the invoice the unit price of which includes charges incurred from manufacturing plant to port, origin port to destination port and insurance on the shipment value which would be 110%. All these will be borne by the exporter. The full expansion of CIF is Cost, Insurance and Freight

4) Similarly the term FOB is also used in export sales. Here, the unit price is exclusive of freight charges from origin port to destination port and insurance. These charges will be borne by the importer.

thanks

G. Lakshmipathi

[Former Member]

hi sir,

thanks and point given.

i need to clarify on your reply which is my intention to post this question.

1) so means most the case, handling charges and local freight cost not base on goods value, am i right?

2) if CIF, the freight cost % is based on goods value? .

thanks

[Lakshmipathi]

1) Yes in most of the cases (I have come across) companies who pay the handling and other charges only on volume of the cargoes and not on the value

2) Here again, the freight cost (assuming from your first post, you are expecting some feedback on export scenario), will always be based on volume or weight only.

thanks

G. Lakshmipathi

[Former Member]

Hi,

Thanks for your clarification.

I asked issue on freight and handling charges because i do see in the 'condition' tab the cost % is based on goods value. this is what making me confused.

But as what your reply, i think generally company will NOT base on goods value for freight and handling charges, am i right?

thanks

[Lakshmipathi]

If you can be specific on your comments "'condition' tab the cost % is based on goods value", it will be easy to explain clearly rather than being giving generic explanations.

Which condition type has value. For information, the standard condition type for freight is KF00 which has the Calculation Type as "Gross Weight" only and not value.

thanks

G. Lakshmipathi