AX2012 - Costing - Inventory Model FIFO Include Physical Value


I am thinking possible to do the BOM calculation based on standard cost but the inventory model is FIFO include physical value.

The inventory in/ out is all based on the inventory model FIFO. While for the BOM calculation, the component cost will be based on the standard cost to compute and roll up to give the finished item cost.


  1. Can I set my inventory model FIFO while i still activate standard cost?
  2. Any implication?



If you set it up as FIFO it is FIFO, it is not standard so you cannot have an active standard cost that means anything. However you could have a standard costing version holding the details and apply these to a FIFO item by pointing it at the correct costing version - your issue will be it is not standard, so as the costs move so will the item, it will not create variances as a standard costed item would.

Hi Adam,

Based on your explanation, “If you set it up as FIFO it is FIFO, it is not standard so you cannot have an active standard cost that means anything.”

If I really set it up as FIFO, but i still activate a standard cost. Does inventory revalue based on standard cost or FIFO?

It revalues based upon FIFO, but you would already have posted to the fixed receipt offset accounts, so it would probably be at teh “stadnard” - basically you would need to create a new item in this sort of group and invoice it different to the active price and see what teh valuation says - I do not know without setting it up and doing it, I am simply guessing!

Hi Adam, we are relatively new to AX 2012. I would to know what at minimum that we need to consider while setting up the item sales/purchase/inventory cost for raw material, finished good and labor/overhead.

a) We use FIFO, Use "Average Cost for Inventory’ and Last cost for COGS. Our costing methods post to GL

We don’t use standard costing and last purchase cost becomes effective going forward.

sales price is based on item’s cost price.

we currently capture material cost in Cogs and we would like to capture direct/indirect labor and overhead charges as part of the finished good item.

We need to capture labor variance and production overhead variance. how this is set up as part of item posting profile?

  1. in order to use Items cost price as a sales price, looks like we need to specify contribution ratio. if so, what is it? can you throw an example?

  2. For purchase items, we can elect “latest purchase price” i believe.

  3. so per requirement (a), do we need to create separate inventory item model groups (at least one for stocked inventory items and another for COGs) is it?

  4. I believe we need to set up cost group (direct/indirect) and cost categories (for labor rates) in order to capture material cost, labor and overhead to be used in production. Is it? Is it mandatory create a inventory costing sheet? and also costing versions based on our scenario? Or when do we not need to?

  5. I see Base price in both Sell Tab and Manage Cost? Which one supersede? From what I understand, the cost group in the “manage cost” Tab can add to profit margin; in the sell tab, it seems we can add “contribution ration” etc., its bit confusing as I try to look at both of these Tab and trying to make sense. Appreciate if you could clarify.

Thank you

Also, we would need to capture purchase price variance, labor and overhead variance. How could we? I see that PPV and Production variance options available in the Item posting profile (Std cost variance).