What is Average Landed Cost?
Average Landed Cost (ALC) is the average per-unit value of your products in Unleashed. It represents the current cost of each product based on all expenses incurred to procure it and add it to your inventory.
The ALC is essential for understanding:
Your total stock value.
Product profitability.
Accurate financial reporting.
How ALC is calculated
The formula is straightforward: ALC = Total Stock Value ÷ Total Stock Qty
Unleashed automatically recalculates your ALC each time a product's quantity or value changes, ensuring you always have an up-to-date average cost.
Important things to know
Stock on Hand Required: ALC is only calculated for products with current stock on hand. If stock is zero, ALC will be zero.
Tax Exclusive: Unleashed is a tax-exclusive system, so tax is not included in ALC calculations.
Global Value: ALC updates globally across all warehouses, you cannot set warehouse-specific ALCs.
Automatic Recalculation: Your ALC fluctuates naturally based on purchase prices, assembly costs, and returns.
Where to view ALCs
Checking an individual product's ALC
Navigate to your product record.
Click the Cost tab.
Find the ALC field (non-editable) in the top left, next to Last Cost.
Tracking ALC changes over time:
In a product's Cost tab grid, view all transactions that have affected your product's ALC.
Use the Pre Avg Cost and Post Avg Cost columns to see how your ALC has fluctuated.
Costing Analysis Report
For a comprehensive view of the ALC across all products:
Go to Reports > Purchases > Costing Analysis Report.
Filter by Product Code or Description.
Review how completed transactions have impacted each product's ALC.
🤓 Tip: Create a default grid layout in the Costing Analysis Report and it will automatically apply to your product's Cost tab too.
How ALC is used in Unleashed
Your ALC powers several key calculations:
Inventory or transaction value | Formula used | Purpose |
Stock Value | ALC × Total on Hand Qty | Determines the current inventory worth |
Assembly Value | Sum of Component ALCs × Qty | Calculates total assembly costs |
Shipment Value | Sum of Dispatched ALCs × Shipped Qty | Values outgoing shipments |
Sales Margin | (Unit Price - ALC) / Unit Price × 100 | Shows profitability as a percentage |
What happens when the SOH is zero?
If a product has no stock on hand (ALC = 0.00), Unleashed uses the Last Cost as a temporary cost until stock is added.
📌 Note: Last Cost is advisory only and may not reflect the actual upcoming ALC.
Transactions That Affect Average Landed Cost
Your Average Landed Cost automatically recalculates whenever a transaction changes your product's quantity or value. The more precise your transaction costs, the more accurate your ALC - and the more reliable your inventory reporting becomes.
Import Stock on Hand
When ALC is affected: Upon import completion.
How it impacts ALC: Sets the initial ALC and quantity for new products in bulk, eliminating the need for individual transactions.
What this means: Ideal for system setup, allowing you to establish starting inventory values across multiple warehouses simultaneously.
Purchase Orders
When ALC is affected: At receipt and at completion if costs are added post-receipt.
How it impacts ALC: The total purchase price plus additional costs (Cost Lines) calculates a Landed Cost, which recalculates the product's ALC across your total stock on hand.
What this means: All procurement expenses: purchase price, freight, duties, insurance, proportionally distribute across order lines and contribute to your true product cost. When receipted stock is shipped before additional costs are accounted for on its Purchase Order, the shipped stock's value will be recosted to ensure the final landed cost of the receipted stock is registered.
🤓 Tip: Change the cost distribution method per Purchase Order using the dropdown in the Cost Line section. Default distribution settings are in Settings > Company.
Stock Adjustments
When ALC is affected: Upon adjustment completion.
How it impacts ALC: Adjusting quantity and/or value recalculates the ALC. By default, quantity changes generate a proportional value based on current ALC, but you can edit this value.
What this means: Use this to account for stock loss, damage, or reduced value. Any value edits will change the ALC, review the impact in the Warehouse and Global Values headers before completing.
Stock Counts
When ALC is affected: When the Stock Count is completed
How it impacts ALC: Variances between counted and system quantities trigger automatic Stock Take Adjustments, which proportionally adjust value and recalculate ALC. If a product has zero stock (ALC = 0.00) and the count adds quantity, Last Cost is used to value the incoming stock. Review and correct the ALC afterward using a Stock Adjustment or Stock Revaluation if needed.
What this means: Physical inventory counts automatically sync your system with reality, maintaining accurate stock values.
Import Stock Revaluation
When ALC is affected: Upon import completion.
How it impacts ALC: Replaces a product's existing ALC with the new value specified in the Import Stock Revaluation template.
What this means: Efficiently update ALCs in bulk without individual transactions—useful for periodic cost reviews or market price changes.
Assemblies
When ALC is affected: When the Assembly is completed.
How it impacts ALC: The Total Assembly Cost (sum of all component ALCs × quantities + additional costs) is added to the assembled product's stock value, recalculating its ALC. Any changes to an open Assembly affect the Total Assembly Cost and final ALC; ensure accuracy before completing.
What this means: Your assembled products carry the true cost of their components plus manufacturing expenses:
Component costs: Each component's ALC × quantity.
Supplier Costs: Third-party expenses like labor or transport.
Never Diminishing Products (NDP): Internal costs not billed by suppliers (value from NDP's Sale tab Cost field).
Disassemblies
When ALC is affected: When the Disassembly is completed.
How it impacts ALC: The assembled product's current ALC becomes the Disassemble Cost, distributed proportionally to component products.
What this means: Since assembled product ALCs fluctuate over time, component values received from disassembly may not match their original assembly costs. Component ALCs will naturally vary if products are assembled and later disassembled.
Supplier Returns
When ALC is affected: Upon return completion.
How it impacts ALC: Returns adjust stock quantity and/or value, recalculating the ALC based on remaining stock on hand and attributed value.
What this means: Your ALC accurately reflects the true inventory position after accounting for returned goods to suppliers.
Credit Notes
When ALC is affected: When the Credit Note is completed, including returned stock.
How it impacts ALC: Returned stock is added back at the product's current ALC, not the value at original dispatch. This increases stock quantity and value, recalculating the ALC.
What this means: Maintains consistent stock valuation by using current costs, not historical dispatch values.
Special case: If the product has zero stock on hand when the Credit Note is completed, Last Cost is used to value the return.
Key Takeaway
Every transaction that adds stock or incurs costs influences your ALC. By understanding when and how these impacts occur, you can maintain accurate inventory valuations, calculate true profit margins, and make informed business decisions based on reliable cost data.
Best Practices
Regularly review your Costing Analysis Report to monitor ALC trends.
Include all costs in Purchase Orders (freight, duties, insurance).
Double-check Stock Adjustments before completing them.
Verify ALCs after Stock Counts, especially for zero-stock products.
Keep Assemblies accurate changes directly impact assembled product value.
By understanding and monitoring your Average Landed Cost, you'll maintain accurate inventory values, calculate true margins, and make better-informed business decisions.
Frequently Asked Questions
Can I set a permanent ALC for a product?
Can I set a permanent ALC for a product?
No. For products that track Stock on Hand, the ALC automatically recalculates with each transaction affecting quantity or value. This ensures your costs remain accurate and current.
Why do my ALC and Last Cost match when my Purchase Order's Landed Cost is different?
Why do my ALC and Last Cost match when my Purchase Order's Landed Cost is different?
This typically occurs when products are received first and additional costs are added later. In this case, Last Cost displays the ALC instead of just the re-costing amount, providing a more complete picture of your landed cost.
How can I improve my ALC accuracy?
How can I improve my ALC accuracy?
The more precise you are with costs and prices in your transactions, the more accurate your ALC will be. This includes:
Adding all relevant cost lines to Purchase Orders before they are completed.
Recording accurate values in Stock Adjustments.
Including all supplier costs in Assemblies.
Regularly review your Costing Analysis Report.