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Dynamics 365 Community / Forums / Microsoft Dynamics GP (Archived) / What is best way to ad...
Microsoft Dynamics GP (Archived)

What is best way to adjust COGS for an overhead variance

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Posted on by Joe PencilPusher

GP10SP5 Mfg NOT installed.  Using Inventory BOM.
What is the best way to adjust COGS for an overhead variance (whether over-applied or under-applied) ?  Is there a specific process in GP to do this? Thanks.

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  • Frank Hamelly | MVP, MCP, CSA Profile Picture
    Frank Hamelly | MVP... 46,625 Super User 2025 Season 2 on at

    How are you getting an Overhead variance using Inventory BOM? What is overhead being calculated on?

  • Joe PencilPusher Profile Picture
    Joe PencilPusher on at

    Frank, OH was estimated at the beginning of the year (rent, utilities, etc.) , base was labor hours but could be anything – the point is to fully absorb the OH into the cost of the items being produced.  On each BOM OH was included as a line item.   Now it’s the end of the year and we will be calculating the variance from estimate to actual OH costs.  When there is a variance, COGS needs to be adjusted.  My question is, is procedure to make this adjustment?   GL entry? Or through the Inventory module?

  • Suggested answer
    Frank Hamelly | MVP, MCP, CSA Profile Picture
    Frank Hamelly | MVP... 46,625 Super User 2025 Season 2 on at

    Got it.  Thanks for the explanation.  You'll need to do this as a GL entry.  There's no facility to make such an adjustment in Inventory.

  • Joe PencilPusher Profile Picture
    Joe PencilPusher on at

    what about the adjust cost utility in inventory? Never used it so I'm not sure what impact it will have or whether it's the correct tool to use for this.

  • Frank Hamelly | MVP, MCP, CSA Profile Picture
    Frank Hamelly | MVP... 46,625 Super User 2025 Season 2 on at

    Adjust Cost utility is for adjusting the cost on Inventory Receipt layers.  Is your overhead item in the BOM a Sales Inventory Item Type?

  • Joe PencilPusher Profile Picture
    Joe PencilPusher on at

    OH is setup as a 'Services' type item.  I think I got this tip from one of your blogs. :)  So since this item is never received, I assume using the Adjust Cost Utility won't work.  

  • Suggested answer
    Frank Hamelly | MVP, MCP, CSA Profile Picture
    Frank Hamelly | MVP... 46,625 Super User 2025 Season 2 on at

    That is correct sir.

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