How to calculate costs per SKU in a mixed shipment
Assign product-specific charges directly, then split shared charges using the factor that caused each cost, such as packed volume, chargeable weight or insured value. Reconcile the allocations to the bills before dividing by sellable units. Ask Cambridge China Bridge for product-level packing details to support the calculation.
Build a shipment cost sheet
Create a row for each SKU and separate columns for goods, direct charges, shared freight, insurance, clearance, delivery and duty. Record quantity, packed volume, gross weight and invoice value alongside them. The landed price guide explains which costs belong in the total; this guide explains how to distribute them.
Collect the commercial invoice, SKU-level packing list, forwarder’s quote and final bills. Ask for mixed cartons and shared pallets to be broken down by product. Mark estimated measurements and costs as provisional rather than presenting them as actuals.
Allocate direct costs before shared costs
Charge a product-specific crate, inspection, collection or handling surcharge to the product that caused it. Remove these amounts from the shared pool before allocating the remainder. Check whether freight or insurance is already included in the goods price so you do not count it again.
For each shared charge, multiply the charge by the product’s allocation measure divided by the combined measure for all products covered by that charge. Use the same units throughout. Document why the measure fits the bill, and keep the policy consistent unless the charging basis changes.
Choose a basis that explains the charge
Ask the forwarder what determined each charge. For bulky products, a value-based freight split can conceal the space they consume. For dense products, volume alone can conceal the weight they contribute. Match your costing allocation to the carrier’s charging basis where possible.
For a fixed shared fee without a measurable driver, choose and document a reasonable convention. An equal split across product lines can be practical where the work is comparable. Dividing everything by unit count is useful only where the units impose comparable costs.
| Shared charge | Possible allocation basis | Check before using it |
|---|---|---|
| Space-driven sea freight | Packed volume or occupied pallet space | Include outer packing and shared pallet space |
| Weight-driven freight | Contribution to chargeable weight | Ask how the carrier assessed mixed cargo |
| Shipment insurance | Insured value | Check whether products have different cover or premiums |
| Clearance and documentation | Declared lines or documented work | Assign product-specific extras directly |
| Shared warehouse delivery | Pallet space, weight or handling work | Use the factor that drove the delivery charge |
Keep customs and VAT calculations separate
Keep your internal allocation worksheet alongside the broker’s declaration calculations. Ask the broker to explain the freight and insurance attributed to each declaration line, then map the actual duty back to the relevant products. Avoid spreading total duty evenly when products have different duty rates. See what goes into customs value.
HMRC allows UK transport costs included in the total freight charge to be deducted from customs value if they are separately charged and distinguishable. Your internal volume split does not itself establish that deduction. Ask for supporting transport details rather than treating your costing convention as a customs valuation rule.
Recoverable import VAT normally belongs in the cash-flow plan rather than product cost, as explained in the landed price guide. Keep any VAT that cannot be recovered visible separately, and confirm its treatment with your accountant.
Reconcile and preserve the explanation
Check that allocated amounts add back to each source bill, with any rounding difference shown explicitly. Reconcile duty to the declaration and the goods total to the supplier invoice. Replace estimates with actual charges, keeping a record of the changes. Use the freight invoice checking guide to investigate unexpected items.
Add each product’s allocated costs to its direct costs, then divide by its sellable quantity for pricing analysis. Record shortages and rejected stock separately so their effect remains visible. Keep the bills, packing data, allocation formula, reason for the chosen basis and reviewer’s approval together.
Before repeating the order, compare the resulting product margins with an alternative reasonable allocation basis. If the decision changes materially, investigate the driver rather than choosing the split that produces the preferred margin. Recheck the policy when packing, product mix or freight terms change.
Frequently asked questions
Should I split freight by product value or weight?
Use the factor that drove the charge. Packed volume can suit space-driven freight; chargeable weight can suit weight-driven freight. Product value is more useful for value-based insurance than for bulky cargo.
Can I divide all import charges by unit count?
Only where units impose comparable costs. Otherwise assign direct charges first and use a separate basis for each shared charge. A small component and a bulky finished product should not automatically receive the same freight cost.
How do I allocate duty across different products?
Map duty from the broker’s declaration lines to the relevant products. Ask for the underlying freight and insurance split. Avoid an equal allocation of total duty where product rates differ.
What makes a shipment cost allocation defensible?
A documented reason for each basis, reliable packing data, traceable bills and allocations that reconcile to the totals. Keep estimates identifiable and record why any method changed.