Dynamic 365 Business Central: Including Non-Inventory Costs in Finished Goods (SCM Module)

Accurate manufacturing costing is critical for understanding true production expenses and product profitability. With this, organizations can include non-inventory items in the cost of produced goods, for both actual and standard costing scenarios. This feature significantly improves cost transparency, especially for manufacturers that rely on services, subcontracting, or indirect production inputs.

What Are Non-Inventory Costs?

Non-inventory items are costs that are not physically stocked but are still essential to the production process. Examples include:

• External processing or subcontracting charges

• Quality inspection or testing services

• Setup charges

• Consumables not tracked as inventory

Previously, these costs could be consumed during production but were not capitalized into the finished goods cost, leading to incomplete cost visibility.

What’s This Feature?

Business Central allows non-inventory costs to be included directly in the cost of produced items. This applies to:

• Actual costing

• Standard costing

As a result, the finished goods now reflect a more realistic and complete production cost.

How to Enable the Feature

To start using this capability:

1. Open the Manufacturing Setup page

2. Enable the toggle “Include Non-Inventory Items to Produced Items”

Once enabled, Business Central automatically incorporates non-inventory costs during production posting.

General Ledger Impact Explained

Business Central introduces specific value entry types and accounts to handle these costs correctly.

Important Note

This functionality does not apply to Assembly Orders.
Non-inventory items can still be consumed in assembly scenarios, but they do not affect the cost of the assembled item.

Conclusion

The ability to include non-inventory costs in produced items is a major step forward in manufacturing cost accuracy within Business Central. By ensuring that all relevant production costs are capitalized correctly, businesses gain a clearer, more realistic view of their manufacturing economics.

This feature is especially valuable for manufacturers with service-heavy, subcontracted, or overhead-driven production processes.

Thanks For Reading...! 😊

Regards,

Khushbu Rajvi