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Cost of Goods Sold

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Posted on by Fischjm78

Out of nowhere when we run an income statement our COGS are inflated. We traced it back to a cogs calculation for finished product. This product cost around $38,000 in cogs usally, but on this date it is calculated at $2,332,790.69. Dont know why this is being calculated so grossly high or how to fix.

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Hana Xue Microsoft Employee on at

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Hi,
The document mentions that marking affects the profit and loss statement, as shown in the screenshot:
Inventory costing FAQ - Supply Chain Management | Dynamics 365 | Microsoft Learn

In addition, you can also check a few points:
Check the costing settings for the relevant finished products. Ensure that cost components, cost categories, and cost versions are configured correctly. Different costing methods can produce different results. Ensures the correct costing version and method is applied on the specified date.
View the finished product's bill of materials (BOM) and production route. Make sure components and routing steps are defined correctly. Changes to the bill of material or routing may affect the calculated costs.
View inventory transactions for finished products. Look for any unusual changes, adjustments or transactions that may affect costs. Make sure all transactions are recorded correctly.
Best Regards,
Hana

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BillurSamdancioglu 19,856 Most Valuable Professional on at

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You can see the values that are used for calculation in the cost explorer. Can you please share the screen shot of the cost explorer please.

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saurabh bharti 15,039 Moderator on at

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Hi,

This is very common and looks to be inventory value issue. Please look at sales order first and see which item it is ?

Next if this is BOM item then check if there is any component which has higher inventory value during purhase or any thing? Also look at product cost if its manafacturing

If its non BOM then look ate purchase history and see someone entered wrong price or on item master cost price was mentioned high or during return purchase it has high value

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André Arnaud de Cal... 301,206 Super User 2025 Season 2 on at

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Hi Joshua,

Can you check the inventory transactions from all the BOM items consumed for this production orders? Like stated below, the cost for one of these items might be out of control. Once you know the item, you can check what happened in detail to get the cost at this level. What inventory costing model are you using? Have you already run the inventory adjustment job to see if that will adjust and correct the costs?

PS. I have seen such behavior in the past due to a bug, customization and allowance of physical negative inventory.

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Fischjm78 36 on at

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The Cost explorer looks to be right. We are using a FIFO model but have quickly realized we need to change to standard costing since our inventory values do not change that frequent. How do you run an inventory adjustment job?

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André Arnaud de Cal... 301,206 Super User 2025 Season 2 on at

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HI Joshua,

You can go to Inventory management > Periodic options > Closing and adjustments. Here you can start a recalculation and/or an inventory closing which will also recalculate.

You can read more here: Inventory close - Supply Chain Management | Dynamics 365 | Microsoft Learn

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