This is strictly concerning inventory, but I don't see why it couldn't be done for consignment orders also.
Inventory Valuation Methodology
Inventory should be valued at the lower of cost or net realisable value. Cost is defined as the purchase price plus the costs of bringing the products to their current location and condition. This means that transport and freight costs should be in built in the cost of the product. There are various methods of arriving at the cost of the product and these methods are discussed in the section below.
The net realisable value is the estimated selling price of the product in the ordinary course of the business minus the estimated costs of completing the sale and the estimated unavoidable costs that will be incurred to make the sale.
Beside subjectivity involved in estimating the future costs, net realisable value is straight forward therefore the article will now focus on how the cost of inventory is determined.
Read more at Suite101: Inventory Or Stock Valuation: How to Value Inventory http://gaap-standard-accounting-practic ... z0lCT23cWE
That being said, the simplest way to do it is to record your freight costs in a COGS account instead of an expense account. For example, under COGS you have the following accounts:
5000 - Product Costs
5001 - Freight
I have a company now that does that with their freight, even separates out UPS, Fedex, and Other shipping methods by assigning them to all different GL accounts.
That's far easier than allocating costs to each particular piece, and will also accomplish what your partner is trying to do - which is reflect the complete cost of the item.