CPIM Practice Exam

What does the 'landed cost' factor in that is not always included in the product price?

1. Storage costs only

2. Insurance costs for international shipping

3. Transportation and handling fees

4. Retail markup

The correct answer is: Transportation and handling fees

Landed cost is a comprehensive metric that represents the total expense incurred for a product to reach its destination, encompassing more than just the product's base price. This includes various additional costs that are essential for understanding the full expense incurred in purchasing and delivering the product. Transportation and handling fees are integral components of landed cost as they encompass the various costs associated with moving goods from one location to another. These can include shipping charges, freight costs, and any handling fees associated with preparing goods for transit. By including these costs, businesses can accurately assess the total financial commitment involved in acquiring and delivering goods, supporting better pricing and inventory decisions. In contrast, options like storage costs, insurance costs for international shipping, and retail markup represent specific aspects that might not be always factored into the landed cost framework. Storage costs relate to warehousing and inventory management, and while they can play a role in overall supply chain costs, they do not directly correlate with landed cost. Insurance costs are also a critical factor, especially in international shipping, but they are not universally included in the calculation of landed cost for every transaction. Retail markup pertains to pricing strategy and profit margins rather than the actual costs incurred to acquire the goods. Thus, understanding that transportation and handling fees are vital components