Inventory costing in Microsoft Dynamics 365 Finance and Operations one version

Inventory costing options in Microsoft Dynamics 365 Finance and Operations one version D365FO

Inventory costing plays a significant role in knowing the true financials of an organization and is quite a comprehensive topic. These series of post is just to enlighten various costing options at the surface level, their fitment to the business model, industry vertical, compliance, etc. requires a much detailed exercise, niche expertise and spans multiple domains cost accounting, financials, supply chain, etc.

What needs to be done on time to report accurate financial performance ?

The following knowledge sharing on inventory costing in Microsoft Dynamics 365 Finance and Operations one version shall empower you to achieve this goal.

Let us explore all costing models available and their behind the scenes calculations:

• FIFO
• LIFO
• LIFO dated
• Weighted average
• Weighted average dated
• Moving average
• Standard cost

Note* Taking a simple example to drive home the costing methods complex calculations.

The above costing models require inventory closing to perform settlements between receipts and issues. Hence the issue amount after inventory closing varies based on the concept used.

Let’s explore 2 other costing techniques which does not require inventory closing.

The costing model for standard cost and moving average does not require settlements and hence no inventory closing.

Depending on your business, industry vertical, the choice of an inventory costing model greatly impacts your financial and management reporting.

Look for further blogs for details in each of the costing model.

Happy D365FO