The short answer
Because your inventory is valued at landed cost, not purchase price. Landed cost = the PO unit price plus each item's share of extra costs (freight, duty, handling) allocated at receiving. If a $10.00 item shows $11.42 in inventory, the extra $1.42 is its share of those charges — that is the system working as designed.
A worked example
You order 100 units at $10.00 each ($1,000 of goods). The shipment carries $120 of freight and $22 of duty, allocated by value. Each unit absorbs $1.42 of those charges, so the received cost is $11.42/unit — and that is what your inventory, COGS, and margins are based on.
For a deeper explanation of the concept, see The Real Price of Your Product: FOB Cost vs. Landed Cost Explained.
How to see where a cost came from
- Open the receiving report for the receipt in question and review its Extra Costs section — these are the charges that were spread across the received items (Creating and Managing Receiving Reports).
- Check the source PO shipment. Costs entered there flow onto receipts automatically, including proportionally across partial receipts (see Where to enter extra costs: PO vs shipment vs receiving report).
- Each cost line's allocation method (units, value, weight, volume) controls how it was split — see Cost Allocation Methods.
When the difference is a problem
- Cost is higher than expected — a charge may have been double-entered on both the shipment and the receiving report. Remove the duplicate; see How do I correct or reverse a mistake made when receiving a purchase order?.
- Cost equals the PO price exactly, but you paid freight — the freight was never entered, or the extra cost line's filters excluded these items. Add it to the shipment or receipt; see How to Add Costs Upon Receiving in Luminous.
- Cost looks stale or wrong across many receipts — review Understanding Cost Layers in Inventory Management and, if layers need repair, Cost Layer Rebuild: What It Does and Why It Matters.
Related questions this answers
- "Why is my unit cost higher than what's on the PO?"
- "Where did this extra $1.42 per unit come from?"
- "Is landed cost supposed to include freight?"