A mixed container does not have one landed cost rate. It has several, because the costs inside it are driven by different things. Ocean freight is driven by space, so it allocates by volume. Customs duty is assessed at a rate specific to each product's classification, so it does not get allocated at all: it is calculated per SKU and stays there. Insurance follows declared value. Brokerage is largely a per entry and per line charge. Spreading all of it evenly across units is the single most common costing error in importing, and it makes your cheapest SKU look expensive and your most expensive SKU look cheap at the same time.
FASB Accounting Standards Codification 330-10-30-1 sets the requirement plainly: as applied to inventories, cost means the sum of the applicable expenditures and charges directly or indirectly incurred in bringing an article to its existing condition and location. Freight, duty, brokerage, and drayage are all expenditures incurred in bringing the article to your warehouse. They belong in the unit cost. The standard says nothing about how to split them, which is where judgment starts.
Volume-driven. Ocean freight, origin charges, and drayage from port to warehouse. You paid for a box of a certain size. A SKU that consumed 30 cubic meters of that box consumed more of the freight bill than one that consumed 12.
Value-driven. Marine cargo insurance, and any charge quoted as a percentage of declared value. A more valuable SKU carries more of the premium because it is what the premium was written against.
SKU-specific. Customs duty. Under the Harmonized Tariff Schedule, each classification carries its own ad valorem rate. A duty-free item and an 8.5 percent item in the same container do not share a duty burden. Computing a blended duty rate and applying it across the container is not an approximation, it is a fabrication.
Per entry or per line. Customs brokerage, entry filing, ISF, and documentation. These scale with paperwork, not with units or value. Split them across the number of lines on the entry.
Weight-driven allocation matters too, for air freight and for anything quoted per kilogram. Volume and weight both work as bases. Unit count almost never does.
One 40 foot container arriving at the warehouse on 18 September 2026 with four SKUs.
| SKU | Units | Unit FOB cost | Extended FOB | CBM per unit | Total CBM | Duty rate |
|---|---|---|---|---|---|---|
| K-100 | 3,000 | 3.80 | 11,400.00 | 0.008 | 24.0 | 3.7% |
| K-220 | 1,200 | 12.50 | 15,000.00 | 0.025 | 30.0 | 8.5% |
| K-340 | 900 | 18.00 | 16,200.00 | 0.020 | 18.0 | 0% |
| K-455 | 400 | 31.00 | 12,400.00 | 0.030 | 12.0 | 6.2% |
| Total | 5,500 | | 55,000.00 | | 84.0 | |
Costs arriving separately, on four different invoices over about five weeks:
| Charge | Amount | Allocation basis |
|---|---|---|
| Ocean freight and origin charges | 5,880.00 | volume |
| Marine insurance | 275.00 | value |
| Customs duty | 2,465.60 | per SKU rate |
| Brokerage, entry, documentation | 385.00 | per line |
| Drayage to warehouse | 720.00 | volume |
| Total | 9,725.60 | |
Freight at 5,880.00 over 84.0 CBM is 70.00 per cubic meter. K-100 absorbs 24.0 times 70.00, or 1,680.00. K-220 absorbs 2,100.00, K-340 absorbs 1,260.00, K-455 absorbs 840.00. Those sum to 5,880.00.
Insurance at 275.00 over 55,000.00 of declared value is 0.5 percent of value. K-100 takes 57.00, K-220 takes 75.00, K-340 takes 81.00, K-455 takes 62.00. Sum 275.00.
Duty is not allocated. K-100 at 3.7 percent of 11,400.00 is 421.80. K-220 at 8.5 percent of 15,000.00 is 1,275.00. K-340 is duty free and takes nothing. K-455 at 6.2 percent of 12,400.00 is 768.80. Sum 2,465.60.
Brokerage at 385.00 over four entry lines is 96.25 each.
Drayage at 720.00 over 84.0 CBM is 8.5714 per cubic meter: 205.71, 257.14, 154.29, and 102.86. Sum 720.00.
| SKU | FOB | Freight | Insurance | Duty | Brokerage | Drayage | Total | Landed unit cost |
|---|---|---|---|---|---|---|---|---|
| K-100 | 11,400.00 | 1,680.00 | 57.00 | 421.80 | 96.25 | 205.71 | 13,860.76 | 4.6203 |
| K-220 | 15,000.00 | 2,100.00 | 75.00 | 1,275.00 | 96.25 | 257.14 | 18,803.39 | 15.6695 |
| K-340 | 16,200.00 | 1,260.00 | 81.00 | 0.00 | 96.25 | 154.29 | 17,791.54 | 19.7684 |
| K-455 | 12,400.00 | 840.00 | 62.00 | 768.80 | 96.25 | 102.86 | 14,269.91 | 35.6748 |
The four SKU totals sum to 64,725.60, which is 55,000.00 of goods plus 9,725.60 of additional cost. The allocation is complete and nothing has leaked into an expense account.
Spreading 9,725.60 across 5,500 units gives 1.7683 per unit for everything.
K-100 would carry 3.80 plus 1.7683, or 5.5683, against a real landed cost of 4.6203. That is 20.5 percent too high. K-455 would carry 32.7683 against a real 35.6748, which is 8.1 percent too low.
Now price them. K-100 sells at 9.99. At the correct 4.6203 landed cost, gross margin before marketplace fees is 53.75 percent. At the flat-allocated 5.5683, it reads 44.26 percent. Nearly ten points of margin that exists but does not appear in the report.
K-455 sells at 69.99. Correct margin is 49.03 percent. Flat-allocated, it reads 53.18 percent, four points better than reality.
A seller reading those two numbers concludes that the high ticket item is the strong performer and the cheap one barely clears. Both conclusions are backwards. Advertising budget follows the wrong SKU, the reorder quantity follows the wrong SKU, and the discontinuation list has the wrong name on it.
Containers do not always arrive complete, and the invoices for freight and duty rarely wait for you to sort it out.
If 2,600 units of K-100 arrive against 3,000 ordered, the allocation basis changes. The freight was paid on the space actually shipped, so if the 400 units never left origin, the container's CBM total drops to 80.8 and the per-cubic-meter rate rises to 72.77. If the units shipped and went missing after arrival, the freight was consumed and the loss is a shrinkage event valued at the fully allocated cost, not a freight adjustment.
Those are different transactions with different owners. Recording both as "received 2,600" loses the distinction permanently. The inventory layer inside ConnectBooks supports partial receipts against a purchase order, which keeps the open balance visible rather than closing the order at whatever showed up.
This is the timing problem underneath the whole exercise. Goods land in September, the drayage invoice arrives in October, and by then 900 units of K-100 have already shipped.
Two defensible treatments exist. You can hold the receipt open and post the allocation retroactively, restating the cost of those 900 units. Or you can allocate the late charge across the units remaining on hand, which overstates the cost of what is left and understates the cost of what sold. The first is more accurate and more work. The second is acceptable when the late charge is small relative to the shipment.
Pick one, write it down, and apply it the same way every time. A costing policy that changes based on who is closing the month produces gross margin swings that look like business performance and are not.
For federal income tax, the uniform capitalization rules of Internal Revenue Code Section 263A govern which indirect costs must be capitalized into inventory, and they do not always match the book treatment. A small business gross receipts exception exists and the threshold is indexed, which means it moves. This is a question for your CPA against your actual numbers, not something to settle from a blog post.
A landed unit cost of 15.6695 on K-220 is only useful if it follows that unit into a marketplace order and comes back out as cost of goods sold on the right day.
ConnectBooks holds stock by warehouse with FIFO valuation and landed cost allocation, tracks transfers as in transit until received, and posts cost of goods and adjustments automatically against settlement data into your accounting system. That is what turns the table above into a per SKU and per channel profit number instead of a spreadsheet somebody maintains until they leave. The Amazon accounting side of the chain closes the loop.
Running an e-commerce business comes with plenty of challenges, but ConnectBooks is here to make your life easier. With real-time insights, seamless integrations, and detailed tracking of your profitability and inventory, you can stay ahead of the game. Whether you’re selling on Amazon, Shopify, Walmart, TikTok or eBay, ConnectBooks helps you manage your finances with 100% accuracy and confidence, so you can focus on growing your business.
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