Cost tier information is created and used differently in transit warehouses. When the transfer of goods from one warehouse to another occurs, the shipped inventory’s associated lot number, serial number and cost information are transferred to the receiving warehouse.

In the case of inventory with an ‘actual’ valuation method, the cost tiers are moved over to the receiving warehouse individually. In other cases, the entire costs for the shipped inventory are averaged, with a weighted average, and one averaged cost tier is created for the transit warehouse.  The receiving warehouse will have new cost tiers created upon three step transfer receipt according to the normal inventory valuation rules for the inventory in the receiving warehouse.

When the cost tiers for the stock being moved into the transit warehouse are built, the prior non-direct costs (freight, sales tax, other) are loaded into the direct cost component (material) of the new transit cost tier and removed from the non-direct cost components of the new cost tier. So, the tax, freight and other costs incurred originally by the shipping warehouse are all added to the direct cost of the new tier for the receiving warehouse. The old original other component costs (tax, freight, other) are cleared and loaded with new direct costs incurred as a consequence of transferring the inventory. The surcharges the shipping warehouse charges the receiving warehouse for the transferred goods are loaded into the transit cost tier ‘Other’ cost component.  The freight cost for the shipment line for the transfer shipment (entered in Edit Shipment) is loaded into the ‘Freight’ cost component of the transit cost tier.

Below is an example for one transfer order line inventory transactions where $11 freight was charged for the shipping and 3% surcharge ($7.5) was added. The data is coming from timInvtTranCost table which contains the quantities and amounts distributed from from inventory transactions to cost tiers.