In FIFO costing, items are valued based on the first-in, first-out method. While variances are typically linked to standard costing, they can still arise in FIFO scenarios, especially during production processes. Here's how:
Production Variances: When manufacturing items, if there's a deviation from the expected costs (e.g., due to inefficiencies or price changes), the system may post these variances to the accounts defined in the Inventory Posting Groups, even if the items are FIFO-valued.
Inventory Posting Setup: The Inventory Posting Setup page in Business Central allows you to define which General Ledger (G/L) accounts are used for various inventory transactions. For each combination of Inventory Posting Group and Location Code, you can specify accounts for:
This setup ensures that any discrepancies between expected and actual costs during production are captured in the appropriate G/L accounts .
Inventory
Work in Progress (WIP)
Variances (including material, labor, and overhead variances)
Thanks
Ramesh
