Freight Out

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.

For additional information on freight out and FOB shipping costs see our freight out tutorials, or for further information see the Wikipedia freight out definition.

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Last modified May 30th, 2018 by Team

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