Can someone tell me why do we do Inventory Closing. What is the benefit.
I know it is done to settle the issue transaction with the receipt one and unless it is done the cost of item is calculated based in average cost price. But Why is it needed. What is the business implication.
Thanks,
Raju
It will flush all of the known costs through the system, you may purchase an item and consume it in production, which is then sold before the invoice for the purchased item is processed - if the invoice then impacts on the cost this is pushed all the way through the system to adjust all of the costs.
In essence it is to calculate the actual cost (in inventory and costs of sales etc).
Hi Raju,
You do inventory closing because you have decided to use an actual costing method. If you want AX to use actual costs, you must do inventory close. I believe there are performance implications if you never do an inventory close (something related to the number of unsettled inventory transactions becoming large).
I’ll give you an example of a business implication. Running inventory close will (most likely) result in adjustments to the costs of items you have sold in the last financial period. This means adjustments to the contribution (profit) that each of those sales made. Since it is common to report on profit at the end of a financial period, I would want my contribution to be as accurate as it can be. And I certainly wouldn’t want to report it knowing that a normal procedure relating to my chosen costing method had not been completed, especially when that normal procedure will cause my contribution to change.
Thanks Adam and Terry.