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Dynamics 365 Community / Forums / Microsoft Dynamics AX (Archived) / Weighted average cost ...
Microsoft Dynamics AX (Archived)

Weighted average cost inventory

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Posted on by joebongiorno 454

Can someone help me understand what causes the weighted average cost of inventory in my system for some items be fixed.

Yes, I do run a close on a monthly basis.  Yes I do adjust the cost to bring it back to what it should be.

But I would love to find out or to have a list of all the possible reasons the weighted average cost in AX seems to be wrong sometimes

I am running AX 2009

Thanks

Joe

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  • Suggested answer
    Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: Weighted average cost inventory

    Hello joebongiorno,

    I found another 2 documents that might help you understandanding what Dynamics does in regards to costing.

    Please have a look at the following links/documents and let us know if they answer your question.

    blogs.msdn.microsoft.com/.../inventory-costing-in-ax-2009

    download.microsoft.com/.../MicrosoftDynamicsAX2009CostManagementWhitePaper.pdf

    Best regards,

    Ludwig

  • Suggested answer
    Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: Weighted average cost inventory

    Hi joebongiorno,

    Agree with magic1949.

    Please have a look at how Dynamics calculates average prices.

    I do not think that it is a good idea adjusting prices based on some calculations that you are making as the Dynamics average price calculation is a complex process that takes many variables into account.

    There might indeed be some fluctuations, which are however, often leveraged out when you run an inventory close or recalculation.

    Have you run such a close/recalculation already and compared how prices change?

    Please try to carefully investigate and understand what AX is doing with the cost prices before trying to make any kind of adjustments because that can go terribly wrong if you do not consider all factors that impact inventory valuation according to the valuation method selected.

    Best regards,

    Ludwig

  • Suggested answer
    guk1964 Profile Picture
    guk1964 10,886 on at
    RE: Weighted average cost inventory

    Average cost by location implies several hundred different costs for the same item which seems unusual. The more the locations the smaller the quantities to average and thus the greater the likelihood of variation in any given store.

    Retail tends to have fast moving stock.  When you come to month end close its possible you will have an adjustment settlement that does not happen till the next period close when financially invoiced. That can only be made to inventory on hand, if most of the inventory was sold in the previous month and there is little stock then that adjustment might seem disproportionate e.g. a $100 adjustment spread across 1000 pieces  may not  seem unexpected but a $1 adjustment  applied to just one remaining item may look unusual. Over the two periods the overall effect is the same i.e. a $1oo total adjustment but the average may look weird for the one piece remaining.  

    There was a white paper that explained things in detail for Ax 2009 and a lot of extra reports at cu6.

    Tim wrote several posts you might find useful https://timsaxblog.wordpress.com/2016/08/30/weighted-average-inventory-accounting-in-dynamics-ax/ there are also many related community forum posts.

     

  • joebongiorno Profile Picture
    joebongiorno 454 on at
    RE: Weighted average cost inventory

    We run weighted average calculation by location. We have over 240 retail stores.  Each store is a location. Plus we have 2 warehouses that are also locations.

    One I run the inventory close at the end of the month, I then run an inventory listing. I compare the average cost per item (for all locations combined) to my purchases for the past couple months.  Of course I always minor difference...differences of 5% or less are acceptable...due to FX, freight difference, etc. for the  different purchases I may make for these items.  But then sometimes I get  big differences.  I am trying to understand all the reasons that this may happen?

  • Suggested answer
    Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: Weighted average cost inventory

    Hello Joe,

    Can you explain a bit why you think that the values that you see are wrong?

    How did you identify that the values might be wrong?

    Also, can you let us know what AX2009 version you operate?

    What inventory value model have you selected and what parameters have been configured in this form?

    Would be great if you could provide us some additional information.

    Many thanks,

    Ludwig

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