Hi Team,
I have a client who is following FIFO Method. I have a question Why System calculates inventory on running average cost before recalculation and then again re adjusts to FIFO method. Any logical reason please.
The price you pay for something is determined by the invoice you get from your vendor (which may be the same as the price you put on the purchase order, but can be different). It is common to sell items before you have received the invoice from your vendor, or before this invoice has been approved by the relevant person. If you sell an item before AX has the vendor's invoice, it doesn't really know how much that item cost. Therefore, since you are using an actual costing method, it has to wait for the vendor's invoice to be posted, and then has the ability to retrospectively set an actual cost against the sale.
Hi PramodKumar1995,
The way of working is documented here: docs.microsoft.com/.../about-inventory-close
The reason is that in an ERP system, you can post transactions in a different order than they in fact physically have taken place. E.g. you can record all purchases first and then all sales. To be able to have the correct FIFO, the system is using one average method and will recalculate the correct cost based on the costing model when you run a recalculation or closing.
Stay up to date on forum activity by subscribing. You can also customize your in-app and email Notification settings across all subscriptions.
#1
André Arnaud de Cal...
291,280
Super User 2024 Season 2
#2
Martin Dráb
230,235
Most Valuable Professional
#3
nmaenpaa
101,156
Share
Report
All responses (
Answers (