AX 4.0 invemtory costing

sandie

Hi,

I would like to ask on some inventory costing in AX 4.0. Can someone help to answer these:

AX work in weighted average costing, until running the recalculation process and its depending on the inventory model group setup.

I have a question here for the average cost:

With marking process
1) PO1 at 100 x 10(cost price) - after invoicing
2) PO2 at 50 x 11(cost price) - after packing slip
3) SO1 at 120 x20(cost price) - after packing slip

What is the cost now? I got 9.82 in AX 4.0, but in AX 3.0 = 11
Should i miss out some setting, or AX4.0 have different cost calculation?

Secondly about the return in SO, would there be posted physical amount after packing slip posting? I had try out, there is no physical amount after packing slip posting, then the cost price will be even lower because of divided by bigger quantity(on hand increase due to packing slip posted).

I have no ideal on the costing, please help to advice.

Thank you in advance...[/b]

gaurav.shah

Hi there. I do not have much idea of Axapta 4.0.But in Axapta 3.0 the logic of calculating Average cost is :

The formula used is:
(Total Financial Cost Amount / Total)/Total
Average Cost Price =-
Posted Quantity


Example :

Example of Average Cost Price:
On 1 January, one item is purchased for a cost price of $10.00. The On-hand inventory level is one piece, with a posted value of $10.00 and an average cost price of $10.00.
On 5 January, one more item is purchased for a cost price of $20.00. Now, the On-hand inventory level is two pieces with a posted value of $30.00 and an average cost price of $15.00.
On 15 January, on more item is purchased for a cost price of $30.00. Now we have three pieces on hand with a posted value of $60.00 ($10 + $20 + $30) and an average cost price of $20 ($60 / 3).
On 30 January we sell one piece. We would sell this one piece at $20 (average cost price) and we have left two pieces on hand with a posted value of $40 and an average cost price of $20.
If the item had been sold between 5 January and 14 January, it would have been picked at a value of $15.00.

By the above example it seems 11 i s the right answer for Axapta 3.0.

Regards,

Gaurav Shah

veerabhadra25

Hi,

Costing methods like FIFO,LIFO, AVG & Weighted AVG, etc., are universal principles and ERP's cannot change the calculation basis from version to version.

The variation in the given example by Mr. Sandie is due to settings differences in his AX 3.0 & 4.0 applications. The following setting differences might result the variation in costing of both the versions.

1) AX provides flexibility to the user to consider floating amount (i.e un-invoiced inventory) in inventory costing calculations. It seem this setting was not activated in ax3.0

2) Date of inventory decrease/increase might be the another factor.

3) Selection of different costing method i.e “Weighted Avg.,” instead of “Weighted Avg. by date” in either versions.

I hope the above points would provide solution to your problem.

Regards
Veerabhadra
MS Dynamics Consultant

sandie

Hi All,

I know how is it work in AX 3.0. I am just wondering why in AX 4.0 the average cost was different. I am using the same way of entering the transaction.

I have fact that MS have change the way of calculation in the costing in AX 4.0.

I try to copy and paste the article that I read from partnersource:


"
INTRODUCTION
This article describes how the on-hand cost price calculation is calculated in Microsoft Dynamics AX 4.0 when the model group that is assigned to an item is configured to include the physical value of the item.

Note In this situation, the on-hand cost price is calculated differently in Microsoft Dynamics AX 4.0 than it is in Microsoft Dynamics AX 3.0.
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MORE INFORMATION
When the model group that is assigned to an item is configured to include the physical value of the item, the on-hand cost price in Microsoft Dynamics AX 4.0 is calculated by using the modulus value of the following fields: • The Physical cost amount field
• The Financial cost amount field
• The Posted qty field
• The Received field
• The Picked field
• The Registered field
• The Deducted field
The on-hand cost price is calculated by using the following formula:
[|Physical cost amount| + |Financial Cost amount|] / [|Posted qty| + |Received| + |Registered| - |Deducted| - |Picked|]
Note In Microsoft Dynamics AX 4.0, the pipe (|) character is used to bracket a value to calculate the modulus of the value.
In Microsoft Dynamics AX 3.0, the on-hand cost price is calculated by using the actual value of the fields in the following formula:
[Physical cost amount + Financial cost amount] / [Posted qty + Received + Registered - Deducted - Picked]
Note Microsoft Dynamics AX 3.0 does not use the modulus function on these fields.
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Sample on-hand cost price of an item
To view a demonstration of the on-hand cost price calculation, follow these steps.
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Create a new item
1. In the Navigation Pane, click Inventory management, click Items, click Overview, and then press CTRL-N to create a new item.
2. Type or select the information that is indicated in the fields on the new item line as follows: • In the Item number field, type AX123.
• In the Item name field, type Example AX Lamp Item.
• In the Item group field, type Lamps.
• In the Item type field, type Item.

3. On the General tab, type or select the information that is indicated in the fields as follows: • In the Inventory model group field, type DEF.


NoteDEF refers to the Default inventory group. Use the Default inventory model group because it is configured to have the Financial negative inventory field and the Include physical value field selected.
• In the Dimension group field, type Plan.

NotePlan refers to the Warehouse planned coverage dimension group. Use the Plan dimension group because it has no active item dimension line but has an active warehouse line in the storage dimensions list. The active warehouse line has the Primary stocking field, the Physical inventory field, and the Financial inventory field selected.

4. On the Price/Discount tab, type 0 in each Price field, and then close the Item dialog box.

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Create a purchase order
1. In the Navigation Pane, click Accounts payable, and then click Purchase order.
2. In the Purchase order dialog box, press CTRL-N to create a new purchase order.
3. Click to select the A. Datum Corporation vendor line, and then click OK.

Note Click Yes if you receive a message to transfer the vendor information to the new purchase order.
4. In the Purchase order dialog box, click Lines, and then press CTRL-N to create a new line.
5. Type or select the information that is indicated in the fields as follows: • In the Item number field, type AX123.
• In the Warehouse field, type GW.
• In the Quantity field, type 10.00.
• In the Unit price field, type 1.00.

6. Click Quantity, and then type 10 in the Receive now field.
7. Click Posting, click Packing slip, type D1 in the Packing slip field, click OK, and then close the Purchase order dialog box.

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Create a sales order
1. In the Navigation Pane, click Accounts receivable, and then click Sales order.
2. In the Sales order dialog box, press CTRL-N to create a new sales order.
3. Click to select the Office Supplies Inc. customer line, and then click OK.
Note Click Yes if you receive a message to view the new sales order.
4. In the Sales order dialog box, click Lines, and then press CTRL-N to create a new line.
5. Type or select the information that is indicated in the fields as follows: • In the Item number field, type AX123.
• In the Warehouse field, type GW.
• In the Quantity field, type 10.00.
• In thee Unit price field, type 1.00.

6. Click Quantity, and then type 10 in the Deliver now field.
7. Click Posting, click Packing slip, click OK two times, and then close the Sales order dialog box.

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Update the purchase order
1. In the Navigation Pane, click Accounts payable, and then click Purchase order.
2. Click to select the purchase order line of the purchase order that you created.
3. Click Quantity, and then type 10 in the Receive now field.
4. Click Posting, click Invoice, type D2 in the Number field, and then click OK.

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Compare calculation results
1. In the Purchase order dialog box, click to select the purchase order line of the purchase order that you created.
2. Click Calculation, and then click On-hand.
3. In Microsoft Dynamics AX 4.0, verify that the following results are in each field: • In the Physical cost amount field: -10.00
• In the Financial cost amount field: 10.00
• In the Cost price field: 1.00
• In the Posted quantity field: 10.00
• In the Deducted field: 10.00
• In the Received field: blank
• In the Picked field: blank
• In the Registered field: blank

4. In Microsoft Dynamics AX 3.0, verify that the following results are in each field: • In the Physical cost amount field: -10.00
• In the Financial cost amount field: 10.00
• In the Cost price field: 0.00
• In the Posted quantity field: 10.00
• In the Deducted field: 10.00
• In the Received field: blank
• In the Picked field: blank
• In the Registered field: blank

Note The placeholder blank refers to an empty field. A blank field may also contain the value of "0.00." In this example, the on-hand cost price is $1.00 in Microsoft Dynamics AX 4.0 and $0.00 in Microsoft Dynamics AX 3.0.

Please advice