Overhead cost calculation for Work Orders in D365

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Work Order Overhead cost is incorrect. For example, in WO-056284, which was open from August to November, the estimated overhead posted for August and September was at 400%, while for October and November it was 578% for physical transactions. When the work order was closed, the system reversed the estimated cost and posted the financial cost that was in the system at that time. The inventory controller expected $7813.65 to be OH cost when the work order was closed, but D365 calculated it to be OH at closing rate of 578%, this much higher cost at $11543.7004. How can we get the system to be set so it is the tracked rate for the entire length of the work order

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Dynamics 365 Supply Chain Management

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Laurens vd Tang 4,394 Super User 2026 Season 1 on at

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Good day,

What is the behavior setting of the cost group for overhead cost? Is it fixed cost or variable cost?

Best regards,

Laurens van der Tang

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DK-25031317-0 80 on at

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HI:

Thanks for responding as all our cost groups are set up as variable costs

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Laurens vd Tang 4,394 Super User 2026 Season 1 on at

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Good day,

Thanks for your reply. When the behavior is "Variable" the costs are depending of the production volume. Was the production volume higher in October and November higher in comparison with August and September? What do you mean with "tracked rate"?

Best regards,

Laurens van der Tang

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DK-25031317-0 80 on at

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Work Order Overhead cost is seems incorrect. For example, in WO-056284, which was open from August to November, the estimated overhead posted for August and September was at 400%, while for October and November it was 578% for physical transactions. When the work order was closed, the system reversed the estimated cost and posted the financial cost that was in the system at that time. The inventory controller expected $7813.65 to be OH cost when the work order was closed, but D365 calculated it to be OH at closing rate of 578%, this is much higher cost at $11543.70. How can we get the system to be set so it is the tracked rate for the entire length of the work order. (see attached Excel calculations)

route transaction...

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Laurens vd Tang 4,394 Super User 2026 Season 1 on at

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Thanks for sharing. Can compare the production volumes / quantities between both periods? If you've for example a higher volume/quantity in October/November, than the variable cost will be higher.

Best regards,

Laurens van der Tang

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Drew Lencsak 433 on at

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With standard cost, this is the correct behavior based on its design. It will use the Standard cost of the product when the production order is Ended. Every transaction is always compared to current Active standard cost regardless of when that order was created or started. So if the order stays open for a long time and meanwhile, your standard cost changed, it will impact that production order and value inventory to the new current active standard.

If that is not desired, you should talk to your finance team and consulting partner on if standard cost is the correct method for inventory valuation for your business.

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