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D365 F&O Weighted Avg Cost

  • 1.  D365 F&O Weighted Avg Cost

    Posted Jan 29, 2021 10:08 AM
    Looking for anyone who has implemented Weighted Avg Cost method in D365 F&O.

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    Rod Helmick
    RTHGlobal, Inc
    Cave Creek
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  • 2.  RE: D365 F&O Weighted Avg Cost

    TOP CONTRIBUTOR
    Posted Jan 29, 2021 03:05 PM
    Hi Rod,

    What are you trying to do?

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    Ian Gorman, PMP, MCSE
    Solution Architect
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  • 3.  RE: D365 F&O Weighted Avg Cost

    Posted Feb 09, 2021 10:53 AM
    Trying to understand more about the WAC process within D365.  There is very little documentation on this and its something we want to implement from a valuation standpoint.  So wanting to find out more about other companies that have implemented this and if so, pick their brain on the process and how they manage and view this throughout the month.

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    Rod Helmick
    RTHGlobal, Inc
    Cave Creek
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  • 4.  RE: D365 F&O Weighted Avg Cost

    TOP CONTRIBUTOR
    Posted Feb 09, 2021 11:15 AM
    Hi Rod,

    I've uploaded some costing documents. Would you mind browsing these to see if they help alleviate any of your initial inquiries upon review? There are also a wide variety of webinars available on AXUG around costing (incl. weighted average). I often refer back to them when in need of any specific causes.

    If you have any specific concerns, feel free to relay them here and I'm sure those browsing can chime in.

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    Ian Gorman, PMP, MCSE
    Solution Architect
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    Attachment(s)



  • 5.  RE: D365 F&O Weighted Avg Cost

    TOP CONTRIBUTOR
    Posted Feb 10, 2021 09:14 AM
    Hi Rod,

    We implemented Weighted Average Costing when we went to AX2012 and have remained on it in D365. First thing I'd recommend is to be sure you have the correct definition of "Weighted Average". In our prior ERP system, "Weighted Average" referred to a rolling weighted average, meaning the cost updated every time there was an in or out transaction. In D365 (and AX2012 before it), "Weighted Average" is period based. Ideally, this would be monthly, but it really depends on how often you run the inventory closing. It takes the starting inventory and adds all additions during the period (oversimplified, but essentially what happens) to arrive at an average cost for the period, and then applies that average cost to all the outgoing transactions during the period.

    One advantage of this is that the cost per unit on an item is the same for all sales during the period, so it can help to smooth out the margin. One disadvantage is that you never have a final cost of goods sold on a invoice until the inventory is closed for the period, so all your reports until you close inventory are essentially estimates.

    The other option is Weighted Average Date. This is much closer to what we were used to with the rolling weighted average from our previous ERP, as this calculates an average cost per day, rather than spanning a multiday period like a month. Again, that's probably oversimplifying it a bit, because it still doesn't do that calculation until you close the inventory. Only at that point does it retroactively do the daily recalculations.

    Either way you slice it, weighted average has it's own pros and cons. Our original go-live partners, bless them, asked what kind of costing we wanted and took our answer of "weighted average" at face value, without ever explaining the options and implications to us. This is on us as well for not delving deep enough in our research, but we'd been live on AX2012 for 6 months before we ever heard the term "run inventory close" and couldn't figure out how AX was calculating COGS to save our lives. All that said, now that we've settled into it, we do like the consistent monthly cost it provides.

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    Steve Latta
    Accountant
    Ortec, Inc.
    Easley SC
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  • 6.  RE: D365 F&O Weighted Avg Cost

    TOP CONTRIBUTOR
    Posted Feb 10, 2021 09:18 AM
    Edited by Ian Gorman Feb 10, 2021 09:18 AM
    Steve,

    I know that story all too well! Our original partners when I was internal assisted us with implementing FIFO, but had never told us a recalculation was required to true up the numbers.... Three years later we found that out. :-)

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    Ian Gorman, PMP, MCSE
    Solution Architect
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  • 7.  RE: D365 F&O Weighted Avg Cost

    Posted Feb 10, 2021 09:27 AM
    Ian and Steve,

    This is ALL great information and certainly appreciate the feedback.  Let me digest this a bit and I may be back for a few more questions.  Thanks again.


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    Rod Helmick
    RTHGlobal, Inc
    Cave Creek
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  • 8.  RE: D365 F&O Weighted Avg Cost

    SILVER CONTRIBUTOR
    Posted Feb 11, 2021 10:02 AM
    Hi Rod,

    As both Steve and Ian have mentioned, Recalculating inventory is quite important if you want the WA to be as accurate as possible before closing inventory for a period.  We run the recalculation in batch nightly so that any PO invoicing is captured in the WA calculation, thereby ensuring that our COGS reflects the most recent costs.  This is quite important for us as a retail organization as our Executive and Management teams closely monitor margins on a daily basis.

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    Corey Warawa
    Functional Architect
    Liquor Stores Limited Partnership
    Edmonton AB
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  • 9.  RE: D365 F&O Weighted Avg Cost

    TOP CONTRIBUTOR
    Posted Feb 17, 2021 09:45 AM
      |   view attached
    Hi -

    Sharing a document I often use when working with clients.

    Thanks.....Dave

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    Dave Phillips
    Sr Support Escalation Engineer
    Microsoft
    Fargo ND
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    Attachment(s)



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