Item Cost Update

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Posted on by GarethRGL

Good afternoon,

I have a problem I can't get my head around with item costs.

Our item costing method is FIFO, in my head I had assumed I buy 10x Item 1 in January at £5 each, the cost price will display as £5, I sell 7 of these by March, then in March I buy another 5 at £15, again in my head I thought the cost would still display as £5 until the last 3 were sold, then it would update to £15 when down to the last 5 purchased in March.

Either that, or the cost would have updated to £15 end off.

However, our environment seems to actually update the /Unit Cost/ field to an average between the 2, as opposed to the actual cost price, there is a field that says /Last Direct Cost/ admittedly this does show the last price we paid for the item, however, items are setup as Price=Cost+Profit, so when the unit cost field is not correct, it actually screws up our selling price.

Is there a way round this or is there something I'm missing?

Hopefully the above made sense and someone can comment.

Thanks,

Gareth

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Dynamics 365 Business Central

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Azqar 52 on at

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Item Cost Update

Please check your Inventory Setup

if the Default Costing Method is set to Average then it will be Average Costing if its set to FIFO then it will be first in first out

you need to change it to FIFO if you want first in first out

also check what is the costing method selected on your item card
black_s 328 on at

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Item Cost Update

The unit cost will show an average figure.

However, the adjust cost - items function will adjust the cost of the item to the respective original cost of the item ledger entry that was shipped out.
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KasparsSemjonovs 4,209 Super User 2025 Season 1 on at

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Item Cost Update

In item card, the Unit cost displayed is usually "Inventory value / Inventory quantity" - so in your example it would show (3*10+5*15 ) / 8 = 105 / 8 = 13,125 ~=13.13£.
But depending on the Costing Method, system adjusts the item cost for each transaction, so that you get correct value on each document/entry.