BOM Inventory cost

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Posted on by joebongiorno

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For the past two months we have been trying to reconcile our inventory listing with our GL account. We are off more than $800K and that amount is gradually growing. We are a retail company with over 250 locations and over 2000 skus. Trying to reconcile this has been difficult. But we seemed to finally have pinpointed what is causing the issue. It is due to some of our BOM that we produced

For some reason the cost of the item produced is not equal to the components. Example. We produce Item A. Item A is made up of 1 of Item B cost $3, 1 of item C cost $2 and 1 of item D cost of $4 and labour cost of $5 to produce one item. Therefore total cost of the components to produce one item should be $14. Instead the cost of item A is showing up as $40. This is happening and we don't know why? We dont use standard cost.

Can someone help me figure out why this is happening?

We are using AX2009

Thanks

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guk1964 10,877 on at

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RE: BOM Inventory cost

re point 5 I would not be happy with that set up for my customers- read this post to understand why:

www.loganconsulting.com/.../

Note the use of Potential conflicts report - it can run to pages- however you can filter it both by date and by item.
joebongiorno 450 on at

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RE: BOM Inventory cost

Hi

I will try to respond do some of your question: But remember.....almost all of the productions are fine...this error has happened to a couple of productions only.

1) is order actually ended? Yes it is.

2) Was order considered by inventory close? We did close the inventory. The results I am showing are after the close.

3) If so, what does inventory close show as recalculation? As you can see above from one of the screenshots, the only adjustment is $14.03...very minor.

4) Where is the rest of the value sitting? That is the issue I am having. The inventory listing is showing $159,540.03 but the GL inventory account is showing $19,954.78. There is not rest showing elsewhere. It is just not balancing. That is my issue, the inventory listing is not balancing with the GL account.

5) Are both 'post picking list in ledger' and 'post report as finished in ledger' checked? The answer is no. None of them are checked. But again, this error is happening to a few production runs....most all of them are okay.
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guk1964 10,877 on at

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RE: BOM Inventory cost

The items has a huge difference between physical and financial costs.

Is the order actually end ended or just reported as finished? i.e. is there any value left in wip?

Was the order considered by inventory close?

If so, then what does the inventory close show as the recalculation adjustment for the item?

Where is the rest of the value sitting?

(check Report as finished (Physical not ended)

In the model group:

is both post physical inventory and post financial inventory checked?.

Is ‘Include physical value’ checked?

In production parameters:

are both 'post picking list in ledger' and 'post report as finished in ledger' checked?.

Run the Inventory Value Report and the Potential Conflicts Report. filtered for the item and relevant date range

Inventory Value Report represents your Inventory Subledger. You can run this report in detail or in summary. Run it in detail to get the reference category.

There are Production Line = Inventory/RM consumed in a Production Order.

There are Production transactions = Report as Finished of the Item made on the Production Order.

Compare the value of both inventory and WIP against your ledger accounts.
joebongiorno 450 on at

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RE: BOM Inventory cost

Hi

Here is the updates tab. The adjustment amount is very low.
Satish Panwar 14,645 on at

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RE: BOM Inventory cost

Hi Joe,

Can you post screenshot from Inventory transactions 'Updates' tab where you show value of $159..... (4th screenshot). If you see high value in Adjustment column, then post settlement form screenshot and cost explorer as well.

Thanks,

Satish Panwar
joebongiorno 450 on at

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RE: BOM Inventory cost

Hi

Anyone have any help on this?

Thanks
joebongiorno 450 on at

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RE: BOM Inventory cost

Hi

This is the screenshots. As you can see from this production all is good. As you can see the new cost item 960169 for 1,914 items created is correct at $19,954.78. The components used add up correctly.

But when I click on transactions...the amount actually posted to inventory is $159,540,03

IF you do the math on this scan above...the cost showing for the new item is exactly 8 times what it should be. The financial cost (Before any adjustment ) of the components is $19,940.75. The wrong financial cost showing of the new item is $159,526. $159,526 divided by $19,940.75 is exactly 8. It seems that the system calculated the cost 8 times?

We have a couple of other production orders that are wrong and when it divide the wrong cost by the component cost they all give me whole numbers..3 or 8 or 15...but never 8.56343. This means to me that the system must be adding the final cost multiple times.

We are doing many production runs...and 95% of them are okay...but we have caught about 20 production runs where this has happened...it has happened in February, March, April , May and June production runs.

We can't seem to pinpoint what is causing this? Hoping someone can help.

Thanks

Joe
Ludwig Reinhard Microsoft Employee on at

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RE: BOM Inventory cost

Hello joebongiorno,

Can you share some screenshots of your item, especially the cost tab in the released product form?

In addition, it would be helpful if you could share some screenprints of the production and sales orders where you see the different costs. Ideally, also share some screenprints of the ledger vouchers generated.

Many thanks,

Ludwig
joebongiorno 450 on at

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RE: BOM Inventory cost

No. The cost was wrong. It should have been $14 but instead booked $40 to COGS. That is the mistake.
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Ludwig Reinhard Microsoft Employee on at

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RE: BOM Inventory cost

Hi,

In this case everything sounds to be ok and this is actually the standard behavior of AX. The important thing is that you regularly run recalculations or closures of your inventory. This will correct item prices that might temporarily look wrong.

If this answered your question and if nothing else is left open here then please verify the answer.

Many thanks and best regards

Ludwig