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Inventory Costing Issue

  • 1.  Inventory Costing Issue

    Posted Aug 06, 2020 09:24 AM
    We are having an issue with our cost for a specific product.  We are utilizing FIFO for costing.  The revaluations and the floating average throughout the month are consistent with where we feel the cost should be based on current raw material pricing and inventory turns of the finished product.  Then when we close inventory for month, the inventory value report is showing a unit price for that product of ~$0.30/unit lower than the average and what we would expect for that finished product.  We've seen this happening the last few months.  We cannot support this cost, we even have pulled down the inventory transactions and recalculated manually what we think the FIFO cost should be and we come up with the higher price.

    The only thing we can identify so far in the inventory transactions is a purchase order receipt from April that does not have a unit price, but does have a cost amount.  This looks to be because of the way the purchase order matching was processed on the invoice total.

    Any thoughts on where to check that could be causing the inventory value report to pull in a lower cost?


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    Ryan Bacon
    CountryMark
    Mt. Vernon IN
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    The first step toward cloud success. - Migrate from AX to D365 with expert guidance from Microsoft. I'm Ready


  • 2.  RE: Inventory Costing Issue

    TOP CONTRIBUTOR
    Posted Aug 06, 2020 09:38 AM
    Ryan,

    Are there physical transactions for this item on sales orders or purchase orders that have not yet been invoiced at the time of close?

    Is it possible that there is a UOM conversion error? Or is it possible that someone accidentally altered the unit price on an adjustment, counting, or movement journal for this item in the past?

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    Ian Gorman, PMP, MCSE
    Solution Architect
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    The first step toward cloud success. - Migrate from AX to D365 with expert guidance from Microsoft. I'm Ready


  • 3.  RE: Inventory Costing Issue

    Posted Aug 06, 2020 09:49 AM
    Nothing open at the time of close.

    This item does not have a UOM conversion.  We validated all adjustments, counting, and movement journals.

    We've also verified the cost of goods sold for the item after inventory close, and it is more consistent with the higher cost that we think it should be rather than with what the inventory value report is showing.


    ------------------------------
    Ryan Bacon
    CountryMark
    Mt. Vernon IN
    ------------------------------

    The first step toward cloud success. - Migrate from AX to D365 with expert guidance from Microsoft. I'm Ready


  • 4.  RE: Inventory Costing Issue

    TOP CONTRIBUTOR
    Posted Aug 06, 2020 11:20 AM

    You mentioned this item is an FG. Is it used on production orders? If so, are all of these PDs ended at the time of close that have concluded?

     




    The first step toward cloud success. - Migrate from AX to D365 with expert guidance from Microsoft. I'm Ready


  • 5.  RE: Inventory Costing Issue

    Posted Aug 06, 2020 11:43 AM
    It is used on production orders.  All production orders were ended before close.

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    Ryan Bacon
    CountryMark
    Mt. Vernon IN
    ------------------------------

    The first step toward cloud success. - Migrate from AX to D365 with expert guidance from Microsoft. I'm Ready


  • 6.  RE: Inventory Costing Issue

    Posted Aug 07, 2020 03:20 PM
    Hello Ryan,

    Even though the production order(s) are ended, this does not automatically mean that they are cost updated. This only happens when all of the inventory issue transactions to the production have been cost updated as well (if the BOM line items also have a costing method other than standard). Can you verify if all of the underlying issue transactions are still open or not.

    Duane
    ON, Canada

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    Duane Carlisle
    SDC Consulting
    Milton ON
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    The first step toward cloud success. - Migrate from AX to D365 with expert guidance from Microsoft. I'm Ready


  • 7.  RE: Inventory Costing Issue

    SILVER CONTRIBUTOR
    Posted Aug 07, 2020 10:11 AM
    Hello Ryan,

    What other transactions do you use for the item? You're talking about a Finished Product, Is it produced by a production order? If it is so, maybe you're having a quantity variation in the production (is one of the components is not fully consumed?). This represents a difference between the estimated cost and the real cost, which is also different from the real cost after the recalculation.

    You can check the transactions of the item: Cost management > Inquiries and reports > Inventory accounting - inquiries > Transactions. Then, although it will take time, analyze the Physical cost amount, the Financial cost amount, and the Adjustment columns. When you detect a cost variation, you can track the transaction by taking the Number and the Reference of the document. Maybe as @Ian Gorman is suggesting, someone ​by error changed the item cost in a transaction.

    In the item, you can also check if you have on the Latest cost price, and which price the item has. If you want to see the full detail of the financial entries and issues of the item, you can go to the Cost objects button in the Manage cost tab.

    Have a nice day!

    ------------------------------
    Lizzeth Arredondo
    GCG - GONZALEZ, CORTINA, GLENDER Y CIA., S.A. DE C.V.
    Col. Polanco Chapultepec
    ------------------------------

    The first step toward cloud success. - Migrate from AX to D365 with expert guidance from Microsoft. I'm Ready


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