What is Freight Out?
Freight out is an expense for a business and is part of the income statement. It is the cost to a business of shipping its products to its customers.
In the income statement, freight out is included as a variable cost under cost of goods sold as it is only incurred if a product is sold to a customer.
In freight out accounting, a business may recharge the customer indirectly by increasing the selling price of the product to allow for freight out, or it might directly recharge the customer for the actual cost. If the freight out is recharged, then the income received from the customer can be netted off against the freight out expense to give a net freight out cost.
Freight out is sometimes referred to as carriage outwards.
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About the Author
Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years in all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a BSc from Loughborough University.