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Finance | Project Operations, Human Resources, ...
Suggested Answer

Cost Value on Sales Lines

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Posted on by 31
Hi,
We have started our migration from AX2012 to DFO, currently we're running Smart Costing in AX2012.
We're trying to decide which Costing Model to use (Std costing, Weighted Avg, Moving Weighted Avg etc.)
And if we need Smart Costing or can use the out of the box.
 
We would like to get the cost price on our sales orders as accurately as possible.
The scenario we are facing is:
 
We have purchases order receipted in and stock made available for sale.
We sell stock and invoice prior to purchase orders are invoiced.
There can be several weeks from receiving the stock until the purchase order is invoiced.
We regular change the pricing on the purchase order when invoicing
We receive freight charges on purchase orders when we receive the invoice, not prior, and allocate the freight charged across the purchase order lines.
 
When we calculate the margin on sales line level the cost price doesn't seem to reflect correctly.
Which costing model should we use to reflect the correct cost price on sales lines?
Does invoiced sales lines get the cost value update once purchase orders are invoiced?
 
Thank you
Soren
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  • Suggested answer
    Arvind Bharti Profile Picture
    722 Super User 2025 Season 2 on at
    Hi,
     
    Costing in D365 F7O works bit differently for WA, FIFO,LIFO.
     
    During product receipt it will post cost as estimated or physical cost , if you post sales order invoice or consume thgis inventory your cost will be based on this physical cost.
     
    but when you post PO invoice after few weeks by adjusting or adding different cost elements then system will post financial cost for this PO, post that if you run your inventory recalculation then system will automatically correct the correct cost of good sold on the already posted sales order.
     
    So, from costing perspective system will take care of any variance but what i understand you need the correct cost reflection during the SO invoice posting, In that case just be mindful that any costing method you use it will show current financial cost in system and then during month end correct that with actual cost.
     
    Standard cost might show you what you define as costing version.
  • Raj Borad Profile Picture
    1,428 on at
    Hi,
     
    The Moving Average or Weighted Average costing models in fo may not reflect accurate cost on sales orders when purchase orders are not yet invoiced, especially with frequent price and freight changes. Standard costing offers stability but lacks flexibility for dynamic cost updates. 
     
    To achieve accurate margins, especially when sales occur before PO invoicing, consider Actual costing with costing sheets and charges allocation, possibly enhanced by a third-party solution like Smart Costing. 
     
    The fo does not update the cost price on invoiced sales lines once the purchase invoice is posted—only inventory value is adjusted. To capture correct margins, you may need to build a margin analysis report that includes post-invoice cost adjustments.
     
    Thanks,
    Raj D Borad

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