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Issue with item cost

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Posted on by GarethRGL

Hi,

I seem to be having an issue with it cost of items, I may not be understanding this correctly, so if anyone could offer up some advice I would be extremely grateful.

I have assumed that when FIFO is selected on an item, then if 10 are bought at £10, then another 10 are bought at £20, would BC not have a cost price of £10, then once the first 10 units are sold it would know to increase the cost price to £20?

The specific issue I have is someone entered the wrong cost price onto a purchase order and posted it, we then had to create a credit memo to wipe out this purchase invoice, then re-invoice it again, but since then the incorrect cost price has been showing, and because of this we are unable to use the price/profit calculation on the item card, we have to manually set the price for any of these affected items, as if we set 40% mark up, then BC is calculating this off an incorrect cost price, so creating an incorrect sales price, then if we use the sale price list on a customer discount group this is also affected.

This is a screenshot of the item in question, you can clearly see our cost price is £1.89, however, BC is using the since credited purchase invoice, where I think £9 or so was entered incorrectly, to generate a value of £3.14471.

Is there a way to sort this out so the cost price will show £1.89?

Thanks in advance,

Gareth

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Dynamics 365 Business Central

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

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I wrote a blog post about the different cost fields on the item card, it should answer your questions - https://valentincastravet.com/unit-cost-fields-on-the-item-card-in-dynamics-365-business-central/

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

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

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Hi, It looks like you didn't recalculate the costs. You can try the following new method.

Business Central 2024 wave 1 (BC24): Inventory Cost Adjustment tool (new Inventory Cost Adjustment page)

https://yzhums.com/50383/

PS: Design details: costing methods

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

Hope this helps as well.

Thanks.

ZHU

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Ben Baxter 6,575 Super User 2025 Season 2 on at

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To add more information around FIFO costing, it is important to know the "Unit Cost" field on the Item is the calculated Average Cost of your current on-hand Inventory. Your "Last Direct Cost" is the "Unit Cost" from the latest Posted Purchase Invoice.

EX1: If I purchase 1 unit at 10, then purchase another unit at 20, my "Unit Cost" is going to be 15, and my "Last Direct Cost" is going to be 20.

EX2: If I purchase 1 unit at 20, then purchase another unit at 10, my "Unit Cost" is going to be 15, and my "Last Direct Cost" is going to be 10.

In both examples, the "Unit Cost" (hidden field) on the Sales Line is going to be 15 (at first), but after the "Adjust Cost Item Entries" process is run, the system will apply the FIFO cost.

In the first example, the "Unit Cost" of the Sale will adjust down to 10, the "Unit Cost" on the Item will increase, and the "Last Direct Cost" will remain unchanged because we haven't bought more.

In the second example, the "Unit Cost" of the Sale will adjust up to 20, the "Unit Cost" on the Item will decrease, and the "Last Direct Cost" will remain unchanged because we haven't bought more.

Finally, when it is time to buy more, the system is going to set the Purchase Line to the Item's "Last Direct Cost" (assuming no other rules are in place).

Hopefully this helps shed some light on your costing. It is very important to be running your "Adjust Cost Item Entries" process, either automatically or manually, to keep the numbers updated.

Best Regards,

Ben Baxter

Accent Software Inc

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GarethRGL 79 on at

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Hi all,

Thanks for the replies, I have been going through all the steps listed, I have run both item cost adjustments on the guide as well, unfortunately nothing seems to happen.

So every item has a tick where is says "cost is adjusted" but when I do it manually the cost price still does not change.

Is there something I'm missing?

Thanks again in advance.

Gareth

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

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I believe your item was already adjusted, in your screenshot the cost is adjusted boolean is checked yes, so that's why nothing happens when you run the adjust cost item entries again.

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

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SeanN 15 on at

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Have you checked to make sure that the credit memo is correctly applied against the purchase invoice that has the wrong price?Search for application worksheet and filter for the PCM entry and look at Applied Entry.

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