Inventory closing in Microsoft Dynamics 365 Finance and Operations

Inventory closing in Microsoft Dynamics 365 Finance and Operations

• Needs closing and settlements between receipts and issues (marking can be used to transfer actual cost)
  • FIFO (demo)
    • FIFO inventory costing technique in simple terms is based on ‘First In First Out’ i.e. the first receipt is to be settled with the first issue transaction.
  • LIFO (oldest receipt before close/revaluation)
    • LIFO inventory costing technique in simple terms is based on ‘Last In First Out’ i.e. the last receipt (at the time of closing) is to be settled with the first issue transaction.
  • LIFO dated (earliest receipt from consumption day)
    • LIFO dated inventory costing technique in simple terms is based on ‘Last In First Out’ date wise i.e. the latest receipt is to be settled with the issue transaction.
  • Weighted average (demo)
    • Average of all receipts
    • Weighted average inventory costing technique in simple terms is a Periodic weighted average principle i.e. the issues are valued basis the average of the receipts during the inventory closing period.
  • weighted average dated (WA per date)
    • Average of all receipts before the issue
    • Weighted average dated inventory costing technique in simple terms is a Periodic weighted average principle per day i.e. the issues are valued basis the average of the receipts for every day.
    • Weighted average date is an inventory model based on the weighted average principle, where issues from inventory are valued at the average  value of the items that are received into inventory for each separate day in the inventory closing period.
    • When you run an inventory closing with weighted average date, all daily receipts are settled against a virtual issue. This holds the total received quantity and value for that day

• Does not need closing
  • standard cost (may generate a lot of variances if receipt cost are different than std cost)
    • Standard costing technique in simple terms is a statistical and fixed cost approach i.e. the issues are always valued basis the active standard cost price on the item irrespective of the receipts.
    • Any deviation of receipts cost from standard cost are posted to variance accounts
  • Moving average (retail and high volume scenarios)
    • Moving average technique in simple terms is a point in time cost method (perpetual type) i.e. the issues are always valued basis the point in time cost price on the item.
    • Issue cost is final and taken as of that point in time and does not change.
      • Any adjustments to receipts are expensed out.