Microsoft Dynamics 365 Business Central.
Working with inventory costing.
When creating a new item in Microsoft Dynamics 365 Business
Central, one of the important things to specify is the
costing method. The costing method defines how the item is
valued when it enters our inventory, while we store it, and
when it leaves inventory.
We can choose from 5
costing methods: FIFO, LIFO, Average, Specific, and Standard.
For FIFO and LIFO costing, when an item is sold the value
processed is the actual value of either the first or last receipt
of the item.
The Average costing method calculates the average cost of an
item with every positive adjustment.
With the Specific costing method, the item is valued with
the exact cost of that item's receipt.
Lastly, the Standard costing method will use a preset unit
cost and when the actual cost is realized, the standard
cost will be adjusted to the actual through variances.
When you purchase goods, the goods are received through a
purchase order or purchase invoice. Receipt of goods can also
have additional costing elements like freight, insurance, and duty.
Before posting these additional purchase invoices you will need to
assign a value to the specific purchase receipts,
so that the additional cost is passed to the items.
To create a purchase invoice for costing, choose the Search
icon at the top right of the screen,
type "Purchase Invoices" and choose the Purchase Invoices link in
the search results.
Now we'll choose New to create a new purchase invoice,
and then fill in the information required on the Purchase Header.
On the purchase line, we'll choose the type Charge (Item)
and choose the Freight Charge in the Number field.
We'll set the Quantity to one and then set the
Direct Unit Cost with the amount for the freight.
The next step is to assign this cost to a
specific purchase receipt.
We'll press Line, Related Information and then the Item Charge
Assignment option.
The Item Charge Assignment page will open and we'll press
Item Charge, and then Get Receipt Lines to select the receipt lines
we want to assign the cost to.
Now we'll select the lines and press OK to transfer
them to the Item Charge Assignment page.
To get some help to assign the cost correctly, we'll
choose Item Charge and then Suggest Item Charge Assignment.
In the message box that appears we'll need to choose
how we'll distribute cost to the receipt lines.
Equally will divide the amount equally per line.
The other three options will assign the amount based on
the amount, the weight, or the volume of each line.
We'll choose OK to continue.
The Quantity to Assign is now filled in for each line.
We'll choose Close, and then post the purchase invoice.
Posting will create additional value entries for each item
ledger entry of the items' receipts,
increasing the cost of each item by the amount assigned.
And that's it. Thanks for watching.
