Hi Team,
Currently, we are using the Moving Average costing method. Due to frequent cost fluctuations, our P&L statement is not showing accurate margins. To stabilize the margins, we are planning to switch to the Standard Cost method.
In the Standard Cost method, when we post a purchase order invoice at a different price than the standard cost, the difference is posted to the Purchase Price Variance (PPV) account.
For example:
Inventory 100 (5 qty * 20 standard cost)
PPV 25
Vendor liability 125
However, in our scenario, the item is not sold in the same month — it will be sold in a future period.
In this case, we do not want the PPV to impact the current month’s P&L, because the item is still in inventory.
Could you please advise if there’s a standard functionality or configuration in D365 Finance & Operations to capitalize or defer PPV until the item is sold (instead of immediately hitting P&L)?
I think we can use allocations (Basis method) but could you please advise this is best approach or any alternative solution is there.
Thank you,
Yugandhar.
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