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Import/Export Costing. Import/Export Costing. Generally, there are two different points (and two different reasons) for costings: Pre-shipment – estimating what the costs will be Post-shipment – calculating actual costs. Import/Export Costing.
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Import/Export Costing • Generally, there are two different points (and two different reasons) for costings: • Pre-shipment – estimating what the costs will be • Post-shipment – calculating actual costs
Import/Export Costing • Some of the costs that are specific to international trade are costs associated with: • international transport; • international cargo insurance; • import duty; • customs clearance; • quarantine clearance; • permits and licences; • currency conversion; • foreign currency payments; • international marketing; • international travel; and • international trade advice and assistance
Import/Export Costing • In order to capture costs as accurately as possible, it is useful to cost on a shipment-by-shipment basis. • There are two main methods of apportioning the costs across the individual items in a shipment: • Valuation method • Weight/volume method
Import/Export Costing • Computer software such as spreadsheet programs are effective means of calculating costs. • Advantages of using computer spreadsheets include: • elimination or reduction of calculation errors; • less time-consuming; • formulas allow fast re-calculation when details change, making comparisons or evaluating different scenario • using templates reduces duplication of processes for subsequent costings; • landed cost files can easily be stored, retrieved and transmitted electronically; and • reports can be easily generated.
Import/Export Costing • There are several advantages of keeping records of pre-shipment cost calculations: • A comparison can be made with the pre-shipment costing and the post-shipment costing to assist in fine tuning estimates and improving their accuracy in the future. • A record is kept of the financial justification for proceeding or not proceeding with a particular international business transaction. • A record is kept of the financial justification for setting a particular selling price. • Time-consuming duplication and complete re-costing can be reduced when estimating costs for goods that may have been estimated in the past.
Import/Export Costing • There are many reasons why records of actual costs should be maintained: • They may be required for tax and/or customs audit purposes. • They are used in order to set realistic commercially viable selling prices. • It enables you to identify cost reduction opportunities. • It enables monitoring of costs and any necessary action to be taken, i.e. adjust selling prices, change suppliers, hedge currency, etc. • They are required to determine overall performance of the business. • They are required for taxation purposes. • A comparison can be made with the pre-shipment costing and the post-shipment costing to assist in fine tuning estimates and improving their accuracy in the future. • The ongoing viability of the business is dependent on knowledge of what your costs are.
