COGS setup for service item

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Posted on by Community Member

Hi,

We are using AX 2009. There are services which we sell to customer by using service item in sales order. These services are mainly for supplying our man power to customer. I would like to know if below would be possible.

1. Set up cost price at item master since my unit cost will remain fixed and contribution at sales quote/order level for such items as contribution will vary from customer to customer.

2. Currently invoice posting will pass only one GL entry that is debit to customer balance and credit to sales revenue for total invoice value. I want additional entry to be passed as debit to COGS (cost of goods sold) and credit to underlying source GL of cost as per total cost arrived at based unit cost setup in item master. This additional COGS entry is possible for item type item and cost is known to system by way of underlying inventory transaction but I am not able configure the same for item type service and there is no underlying transaction for cost part in case of such service.

Appreciate any solution.

Thanks and regards

Sanjieyv Thakker

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Brandon Wiese 17,788 on at

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In AX 2012, you can achieve what you want for Service type items by using a model group with the Stocked option checked. This causes inventory transactions to be generated but without tracking inventory summary or on-hand, so there's no need to reset the inventory back to 0 periodically as with an Item type.

If you can't check the Stocked box on the model group for a Service item in 2009, then you could use an Item type instead of Service type, and the resulting inventory transaction will allow you to use the Inventory posting setup to select the main accounts for debit and credit accordingly.

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Community Member on at

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Thanks Brandon,

It is good feature in AX 2012 but would not meet my requirement even though let us say if available in AX 2009 because this service items is to supply our internal man power to our client and it is not arranged (procured) from outside vendor. Hence effectively not routed through inventory.

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Brandon Wiese 17,788 on at

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Service stocked items, i.e. Service items with the Stocked option in the model group, get you the COGS additional entry without having to carry on-hand quantity or value. They have nothing to do with vendor or procurement necessarily, although you can use them on purchase orders if you want.

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Ludwig Reinhard Microsoft Employee on at

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Hello Sanjieyv Thakker,

Have you considered using the Dynamics AX Project module? Within this module you can do all the things you want out of the box without having to struggle around with service items, cost price issues and everything related that you mentioned above.

Best regards,

Ludwig

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Community Member on at

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Thanks and agreed Ludwig,

However nature of business is more of trading activity and project module will not be the best choice due to that for multiple reasons.

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Community Member on at

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Hi Brandon,

We have manged to address this in line with what you have suggested.

Many thanks and best regards

Sanjieyv Thakker

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Raj Patil 4 on at

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Hi Ax gurus,

I have scenario, I have item (not service type) with stocked option as 'model group' now client is asking us to change the item to (service type), but when we do so Ax is picking up cost price from on hand instead from item master.

Is there parameter that I can use? Once I change item to service type? Any help is REALLY appreciated.

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Ludwig Reinhard Microsoft Employee on at

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Hi Raj Patil,

It would be great if you could create a new thread for your issue and provide some supporting information such as screenprints from your item master, etc.

Many thanks,

Ludwig

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Tim Schofield on at

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Hi Raj, when you issue AX uses the inventory cost, and for an item that is normally created by purchasing the item. But for a service that is just sold and never purchased use an item model group of FIFO and tick Fixed receipt price. Then setup a cost price on the item, or activate the cost price per Site. Then you will see that AX will issue your service at that fixed cost price. This will certainly work for a new item (with no transaction history) - not sure what will happen with an existing item or if you can convert though. Try this out in a Test system.

Tim

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Raj Patil 4 on at

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Sorry for getting back so late, but I did create another thread for this, but never got any response on that one.

My issue has been resolved though.

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