From FIFO to Standard costs.

Business Central/NAV User Forum
1

Hi,

I would like to know if some of you experiment the change of method in inventory management. We would like to implement STANDARD costs while using actually FIFO.

What are the risks?

Is there a best way to do it?

Thanks for your help

Annaick

2

Hi,

To begin with once item ledger entries are created against an Item , then you cannot change the costing Method.However you change the costing if no entries are posted.

For Standard costing the inventory will be valued as per the standard cost define on Item card , no matter what the acquisition cost.Standard costing is a technique which helps you to control costs and business operations. It aims at eliminating wastes and increasing efficiency in performance through setting up standards or formulating cost plans. Variance will be created in such cases and will be helpful for analyses pupose.

While in FIFO method Inventory will be valued as per the acquisition cost of First item that was acquired.

Business process plays important role while selecting the costing method. Outsiders cant suggest you which is the best practice, each method has it own prons and cons.

If your company is into producing standardized products and are repetitive in nature. Examples are cement industry, steel industry, sugar industry etc. Then you can go ahead with Standard cost. or else FIFO is widely accepted one.

I hope answered your query.

Regards,

Faisal Bukhari

3

Hi Annaick,

as Faisal said there is no way to change the costing method after the first entry of an item hs been posted (likewise with item tracking code and some other fields, like base unit of measure code). However, there is an AddOn which can change the costing method in a consistent way and (AFAIK) regardless ov the state of the inventory. It is called Costing Method Change for Dynamics NAV, here ist the link: https://www.impuls-solutions.com/Pages/1048.aspx

with best regards

Jens

4

Thanks to all for our answers.

On my side I find a microsoft guide on the standard costs conversion.

The change will be a management decision but I wanted to have all elements to be sure that was feasible in AX.

Regards

Annaick

5

Hey did you find anything interesting about conversion ? Where such information can be found ?

6

From This adress you can download AX documentation

http://www.microsoft.com/en-us/download/details.aspx?id=4306