Certified Supply Chain Professional (CSCP) Practice Exam

Which of the following costs may be omitted from landed costs?

1. Shipping costs

2. Sales, administrative, returns, and taxes

3. Production costs

4. Insurance and handling fees

The correct answer is: Sales, administrative, returns, and taxes

Landed costs refer to the total cost of a product once it has arrived at a buyer's door, including various expenses incurred during shipping and handling. These costs typically encompass shipping costs, insurance, handling fees, and production costs, as they directly relate to bringing the product to the point of sale. Sales, administrative, returns, and taxes are considered overhead or indirect costs associated with the selling process and are not directly related to the transportation or handling of the goods. When calculating landed costs, businesses focus on costs that are necessary for physically acquiring and transporting the goods to a designated location, rather than those associated with sales processes or operational overhead. Thus, these costs can be omitted from the calculation of landed costs, distinguishing them from the more direct expenses that contribute to the delivery of goods.