FIFO cost price calculation issue in AX 2012?

How does AX calculate the cost price (in the FIFO). I have post physical and post financial ticked. negative financials only.

storage dimensions - site, warehouse and location but physical and financial ticked for site and warehouse only.

When we raise a PO and receive an item (but not yet invoiced), the on-hand quantity is updated but cost amount is nil.

AX doesn’t seem to take the purchase cost of that item into account while calculating the running average cost. Why?

i posted a movement journal for 34 quantity at $750 and it shows 12,750 as financial cost amount.

I received 10 items at $750 and another 10 quantity at $500, showing 12,500 as physical amount. but the cost price shows as $375 why?

34 quantity at $750; 10 at $750 and 10 at $500 - I was expecting the running average to be $467.6 as there is a total 54 quantity.

Appreciate your help. many thanks.

There are 2 general scenarios of inventory update:

  1. Movement journal: When you post movement journal, inventory is updated both physically and financially. This means inventory stock is updated and financial cost also. Your running average cost will be updated.Typically, there is no separate physical transaction like the one you see in PO packing slip update.

  2. Purchase Orders: There is a checkbox in item model group called Include physical value.

When this field is checked, at the time of packing slip, financial cost is not updated but running average cost is updated. The further issues will be based on updated running average cost. But when you perform closing, system will take only financially updated price.

When this field is unchecked, at the time of packing slip your running average cost is not updated.It is updated only when PO is invoiced.

In your case, i think include physical value is unchecked and that’s why running average cost is not updated. Now run this scenarios again with include physical as checked.


Thanks a lot pranav. I appreciate it. I have two locations where A is used for RAW and B is where production order and produced items go.

Now I notice that when I run production order with site, warehouse and location B, the on-hand quantity for that item shows two lines - 1 showing the original quantity and it shows the posted quantity, cost price and financial amount - the cost price here seems to be correct.

2nd line shows the quantities (that were deducted for the Production order) with negative physical amount and it shows the -ive financial amount and posted quantity that match the production order with a different cost price. I am not sure why AX is showing this line (is it because the production order finished good is going at location B?).

I haven’t ticked ‘physical/financial’ for the storage dimension at this location level but site and wareshouse.

However, the cost used to calculate the realized consumption price is not the cost price (running average) rather it is almost 50% less. If we close the inventory, will this be readjusted?

many thanks,

Why would you expect $476.6 - you have 54 in stock at a total cost of $38000 which is an average of $703.70.

Difficult to say without seeing the transactions etc., but your last expectation of $476.60 says to me you are looking at this incorrectly.

Hi Adam, you are correct. In fact, I didn’t post the 20 quantity so only 44 has been financial updated with financial amount of $20250 and show the cost price as $460 for the location A. However, the AX shows another line Site-Warehouse-Location B showing -1 quantity and financial amount is $375 - this is for the production order line for a quantity of 1.

The produced item is going into location B. two questions 1) is it normal for AX to show the -ive quantity location B matching the production order requirement

  1. Why the realized consumption price is not $460. I don’t know why AX calculates a different price

Hi Adam, I seem to narrow down the issue - 1) I created a new PO to see if it would update the financial amount and adjust the cost price, which it did. 2) i changed the location from B to A at production bom lines. However, the PO which were created earlier, didn’t reflect on the cost amount (though the ledger line shows the posted - financial into inventory account) but seem to have posted to a different inventory account.

Hi Patrick ,

I suggest you please check before you post the questions , most of the functional questions you post under AX - Developer forum [:O] ,but you need to post under AX - End user forum.

If you post under the Functional queries under technical then you would get the less responses .

I suggest you please make sure to post the functional questions under AX - End user forum.[:D]

You need to check your posting profiles then.