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Dynamics 365 Community / Forums / Microsoft Dynamics NAV (Archived) / Costing Method = FIFO,...
Microsoft Dynamics NAV (Archived)

Costing Method = FIFO, Associated Standard Cost

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Posted on by Rohit0Sharma 345

When would we setup Invoicing for a Manufactured Item so that the Costing Method = FIFO and we also evaluate a Standard Cost for the item (by Calculating Std Cost)?

If the item is following te FIFO costing method, what is the Standard Cost used for?

Thanks

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  • Suggested answer
    Aleksandar Totovic Profile Picture
    Aleksandar Totovic 16,765 on at

    FIFO and Standard are two totally different cost methods. You cannot use both of them for the same item. You need to choose what cost method you want to use for your goods. It depends by your company accountant policy.

  • Rohit0Sharma Profile Picture
    Rohit0Sharma 345 on at

    I completely agree with you. However I have seen a couple of NAV setups done this way. One example is by Archerpoint:

    community.dynamics.com/.../landed-cost-when-using-dynamics-

    nav-standard-cost-method.aspx

    I am trying to get the motivation of why you would setup an Item this way (Figure 1) and what it means.

  • Rohit0Sharma Profile Picture
    Rohit0Sharma 345 on at

    Link above formatted:

    community.dynamics.com/.../landed-cost-when-using-dynamics-nav-standard-cost-method.aspx

  • Suggested answer
    Aleksandar Totovic Profile Picture
    Aleksandar Totovic 16,765 on at

    I suggest you to ask them as blog comment. They presented one example how you can use these two cost methods, but in purchase process.

    You ask for manufacturing process and this article is not related with production. In manufacturing process, we usually use Standard cost method when we want to have planned fixed cost for goods through year. If you can calculate actual mfg. cost per each item, I think this is better to use FIFO cost method. But, this is your choice, depends of your requirements.

  • Verified answer
    Community Member Profile Picture
    Community Member on at

    I have clients using FIFO as costing method for manufactured items and are using the standard cost roll-up just to get a reference cost at the time of establishing a new item.

    When you do a standard cost roll-up the roll-up costs and single-level costs fields in the item table gets populated (if you add those to the page a user can see them). Those are also what is displayed on the statistics page in the standard cost column on production orders. So, doing a standard cost roll-up on an FIFO item can add some value for a user (but the inventory and COGS will always be FIFO).

    To me FIFO is more common in Europe and Standard cost more common in the US.

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