# About expense proportional costing

## Learn how shipping and discounts are factored into your material unit costs

When you create a new material expense, the total shipping and discount paid on the expense are automatically proportioned to each material purchased. This allows all unit costs in Craftybase to represent the "fully landed" unit cost for your inventory valuation and thus COGS calculations. Learn more about material costs here →

As an example, say you have created an expense containing 3 materials that you have purchased from the one supplier:

Material | Quantity | Total Cost |

Blue Ribbon | 1 spool | $10 |

Red Ribbon | 1 spool | $14 |

Green Ribbon | 1 spool | $12 |

$36 |

The supplier has charged you a shipping amount of $10 to send these materials to you.

When you save the material expense, Craftybase will calculate how much of the $10 shipping charge should be applied to each material. We do this by calculating the percentage of each cost relative to the total amount paid.

Taking a look at Blue Ribbon, we can see that $10 of $36 is ~27.77% of the total. Applying this percentage to the $10 results in ~$2.77, which we then include as part of the material's fully landed cost.

Material | Quantity | Total Cost | Shipping* | Landed Cost* |

Blue Ribbon | 1 spool | $10 (27.77%) | ~$2.77 | ~$12.77 |

Red Ribbon | 1 spool | $14 (38.88%) | ~$3.88 | ~$17.88 |

Green Ribbon | 1 spool | $12 (33.33%) | ~$3.33 | ~$15.33 |

$36 | $10 | $46 |

* For this example, we are rounding all values to 2 decimal places for simplicity, however in reality, Craftybase will calculate this with much more accuracy (to 5 decimal places).

Once each material's landed cost is calculated, this is then added to your stock adjustments and your real time Actual Unit Cost of each material is recalculated to factor in the new amounts.