Small and medium business | Business Central, N...

Automatic cost adjustments affecting valuation

(3) Share

Report

Posted on by MaxwellDziya

Why does business central continue to post cost adjustment (automatic cost adjustment) even after product/item has been sold.

The current costing method : Average

Categories:

Dynamics 365 Business Central

I have the same question (0)

All responses (10)

Answers (0)

Suggested answer

Khushbu Rajvi. 20,275 Super User 2025 Season 2 on at

Like (1)

Report

Hope this helps and give you some hint: https://community.dynamics.com/blogs/post/?postid=e9ba8209-7c2a-4856-af7d-9e838422937b

https://community.dynamics.com/forums/thread/details/?threadid=034fd2aa-2580-4a84-af73-93af2332ae39

https://community.dynamics.com/forums/thread/details/?threadid=69bc595d-4408-4712-89dc-56e162246fec

https://yzhums.com/50383/

Was this reply helpful? Yes No
Suggested answer

Valentin Castravet 31,340 Super User 2025 Season 2 on at

Like (2)

Report

The purpose of the automatic cost adjustment function is to ensure that cost changes from inbound item entries (i.e. when it was purchased) to the outbound item entries (i.e. when it was sold) are reflected accurately. For this reason, even if an item has already been sold, any changes to its purchase cost will update your COGS.

Valentin Castravet
Work: Zander ERP Services
Blog: Dynamics 365 Business Central Insights
LinkedIn: www.linkedin.com/in/valentin-c-0500a247/

Was this reply helpful? Yes No
MaxwellDziya 60 on at

Like (0)

Report

Hi Valentin,

What happening is , when we purchase say product X at $0.5 in location A and we sell some quantities (not all) in that location. We then receive new stock of product A now at $0.45 in the same location, the system is still going back to run an adjustment of the previous sold quantities (posted sales invoice), sort of calculating the new average cost (bear in mind this stock we nolonger have it). Is this how Average cost works ?

Was this reply helpful? Yes No
Suggested answer

YUN ZHU 95,331 Super User 2025 Season 2 on at

Like (2)

Report

Hi, hope the following helps as well.

Design Details: Cost Adjustment

https://learn.microsoft.com/en-us/dynamics365/business-central/design-details-cost-adjustment?wt.mc_id=DX-MVP-5004336

Thanks.

ZHU

Was this reply helpful? Yes No
Suggested answer

Yi Yong 2,555 Super User 2025 Season 2 on at

Like (0)

Report

Hello,

Below three is the common cases where the item's cost will get adjusted even after posted sales invoice.

1. The items are still under "Expected Cost" and not "Actual Cost" when you post the sales invoice.

This is where the items are only received but not yet invoiced..

When you post purchase invoice for these items, the system will post adjustment to the item cost and the costing will goes from "Expected Cost" to "Actual Cost".

2. You received the same items on the same date.

For example, the batch of purchase are posted on 1 Jan 2025 at $0.50.

Then you sold the items on 10 Jan 2025.

In any case, if you receive items on 1 Jan 2025 again at $0.45 (backdated posting), the system will post adjustment to the 10 Jan sales invoice.

3. Item Charge

If you post item charge to any posted purchase receipt that was sold, adjustments will be made to cost.

Was this reply helpful? Yes No
Suggested answer

Jainam M. Kothari 15,631 Super User 2025 Season 2 on at

Like (1)

Report

Hello,

Adjust Item - Cost Entries

The main purpose of the "Adjust Item - Cost Entries" batch job in Business Central is to ensure that the costs of items are accurately reflected in your inventory. This process adjusts the cost of goods sold (COGS) for historic sales entries to match the actual purchase costs, ensuring correct inventory valuation. This is particularly important when items are sold before their purchase costs are fully invoiced. The batch job can be run manually for all items or specific items, and it updates the unit cost on the item card, clears work-in-progress (WIP) accounts, and posts variances.

Post Cost to G/L

The "Post Cost to G/L" batch job is used to post inventory costs to the general ledger. This ensures that the financial books accurately reflect the changes in inventory value due to transactions like sales shipments, purchase invoices, or inventory adjustments. If automatic cost posting is not enabled, this batch job must be run manually to update the general ledger with the latest inventory costs. It creates general ledger entries based on value entries, ensuring that the inventory accounts, adjustment accounts, and COGS accounts are up to date.

i hope this can help.

Was this reply helpful? Yes No
Gerardo Rentería Ga... 25,157 Most Valuable Professional on at

Like (1)

Report

Hi, good day
I hope this can help you, and give you some hints.

Adjust Cost – Item Entries: What it is and Why You Need It for Accurate Costing and Inventory Valuation

Average costing Deep Dive in Business Central – Peik's Corner

Best Regards
Gerardo

Was this reply helpful? Yes No
Suggested answer

Valentin Castravet 31,340 Super User 2025 Season 2 on at

Like (1)

Report

Hi Valentin,

What happening is , when we purchase say product X at $0.5 in location A and we sell some quantities (not all) in that location. We then receive new stock of product A now at $0.45 in the same location, the system is still going back to run an adjustment of the previous sold quantities (posted sales invoice), sort of calculating the new average cost (bear in mind this stock we nolonger have it). Is this how Average cost works ?

Yes, that sounds right. That's how average cost works. Also, there are several fields in the Inventory Setup page that will affect this, specifically the the Average Cost Period field.

Valentin Castravet
Work: Zander ERP Services
Blog: Dynamics 365 Business Central Insights
LinkedIn: www.linkedin.com/in/valentin-c-0500a247/

Was this reply helpful? Yes No
CN-24021152-0 79 on at

Like (0)

Report

Hello MaxwellDziya,

In case you want to avoid system performs an automatic adjustment even after product/item has been sold, I would recommend you to start using Inventory Periods.

Working with Inventory Periods you can ensure that your Financial Monthly Reporting will not be changed during the time, once any adjustment that will occur will be posted on the current period you are working.

Here is some articles where you can find further details how to manage Inventory Costs and Inventory Periods:

Managing inventory costs - Business Central | Microsoft Learn

Work with inventory periods - Business Central | Microsoft Learn

Hope this may help to achieve your goals.

Kind Regards,

Carmen Nunes

Was this reply helpful? Yes No
Suggested answer

Khushbu Rajvi. 20,275 Super User 2025 Season 2 on at

Like (1)

Report

If this helps: https://community.dynamics.com/blogs/post/?postid=e9ba8209-7c2a-4856-af7d-9e838422937b

Was this reply helpful? Yes No