Inventory Costing error after inventory closing

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Posted on by Yin Mon Pyone

Dear Experts,

Our inventory cost of some items are quite high after running the inventory closing. Those items are not being used for so long and only on January 2019 inventory closing, cost amount are up. We run inventory closing every month. Therefore, it should not be calculated cost back to last two years ago.

You can see the unit price is suddenly so high.

Why system is calculated back date although we close inventory every month?

What is really happened in inventory transaction?

Thank You.

YMP

The screenshot is not appeared here. Upload image is error too. How to do it?

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André Arnaud de Cal... 300,911 Super User 2025 Season 2 on at

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Hi YMP,

The screenshots are not visible. Can you repost them? Can you also tell what inventory costing model you are using and if you allow for negative quantities and if this happened?

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Yin Mon Pyone 12 on at

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Hi Andre,

I was trying to post screenshots many times but not working.

We are using weighted average cost and allow for negative inventory.

My confusion is why system calculate the cost from closed inventory period.

Thanks.

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Ludwig Reinhard Microsoft Employee on at

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Hi,

Please save your screenshots as pictures and upload them via the 'use rich formatting' button/form.

Thanks,

Ludwig

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Verified answer

guk1964 10,888 on at

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Do you mean negative physical, or negative financial , or both?

Inventory close will revalue financially updated 'Issue' transactions (i.e. invoiced Sales orders), and it uses financially updated 'Receipt' transactions to do that (i.e. invoiced purchase orders). When issue transactions are not financially updated, , then inventory close will not revalue.

You receive a product, and then consume and/or sell is immediately, and thereby realize a cost of goods before you have paid for the product. Ax does not know the actual cost of goods while the product receipt is not yet invoiced (e.g charges may apply). the invoice may arrive after inventory close. Maybe last period you bought 100 at $10 each pieces and sold 99 pieces. This period you only have 1 left in stock. The invoice comes in at 1100 not 1000. So you have a $100 to adjust but you only have one piece of inventory left to adjust the cost so the cost of that 1 piece will look high after adjustment. however the total cost of sales for the item, over the two periods will be correct.

With the Weighted average model, AX will not close (settle) un-invoiced purchase orders. So an un-invoiced Purchase order cannot be settled to a Sales order by Inventory close. The cost of the issue transactions that are settled to that PO are updated when you next run Inventory close.

Similarly, when you End a production order, then AX can settle the cost of the production order to a sales order. Should the purchase order for the raw materials be invoiced at a different cost, then the cost of the production order may change, and in turn that causes the cost of the sales order to change as well.

To understand what was settled, when close is completed go to Inventory and Warehouse management > Periodic > Closing and Adjustment, and highlight the inventory close and click on settlements to view all of the adjustments that were made for the month. (You can also view the voucher from this form). Inventory close will mark receipts to issues, (which recalculation does not do). Inventory close can change which receipts are used to cost an issue. It will not post into a closed period, but it can make adjustments to transactions in previous periods regardless of whether they are closed or not (it posts the adjustments to the date of this Inventory close/recalculation).

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Yin Mon Pyone 12 on at

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Hi ,

Your answer is very helpful to me as one of my consideration although it is not direct answer.

Thank You.

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Yin Mon Pyone 12 on at

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Dear Experts,

Can I ask another question ?

We understand that negative cost is shown automatically from system when using movement journal.

In our adjustment, negative cost shown in movement journal is different with our item unit cost.

It is not showing item unit cost from item transaction.

My questions are

from where, system take for negative unit cost shown in movement journal?

Thank You.

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Suggested answer

Zain Mehmood 4,187 Most Valuable Professional on at

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Hi Sweety Star,

The cost on movement journal would come on the basis of active cost version of the item. If you have latest cost price or cost by variant check box checked in for the item. System will make costing versions of the item. The cost on movement journal would be coming from there. You can always see it in the costing tab of the of the main products window. But when you run the inventory closing, it will be based on your actual transactions during the period.

Hopes this clears your query!

Thanks,

Zain Mehmood.

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