Inventory cost calculation

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inventory cost is calculating based on the purchase unit price with out considering the discount percentage and net amount. ex unit price is 100 discount is 20% new amount is 80 , cost should be 80 but it is calculating with 100. Using R3 using weighted average method and include physical value is marked.

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Prashant Singh 8,802 on at

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RE: Inventory cost calculation

Dear ogireddy,

I think system will calculate the cost of the item 100 and 20 will be vendor cash discount.

Regards,

Prashant Kumar

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RE: Inventory cost calculation

Thanks Prashant but it will effect the customer margins and cost price will be wrong when ever discount is given in purchase orders

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Guy Terry 28,897 Moderator on at

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RE: Inventory cost calculation

Hi ogireddy,

If you go to Inventory management -> Setup -> Posting -> Posting -> 'Purchase order' tab -> 'Discount', have you a Main account defined (and which would apply on the item(s) which have this behaviour? i.e. where the Item code is 'All', or the Item code is 'Group' and the Item relation is the Item group for the items you are buying with a discount.)

My guess is that you do...

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RE: Inventory cost calculation

Dear Guy Terry,

Thanks for your response..in discount tab

item code: Group

Item Relation: item group name

Account Code:All

Main Account: 12333 this set up is done previously

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Guy Terry 28,897 Moderator on at

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RE: Inventory cost calculation

I think this is the cause...

If you do not specify an account for purchase order discount, the amount posted to the inventory account includes the discount, and therefore the cost of the inventory item includes the discount.

If you specify an account for purchase order discount, the discount amount is posted to this discount account and gross amount is posted to the inventory account. Therefore, the cost of the inventory item is the gross amount.

Perhaps you can try this in a test system, to confirm?

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Community Member on at

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RE: Inventory cost calculation

Thanks Guy Terry,

Discount is not calculated at Product receipt level,but invoice level it is showing discount.

inventory cost is taking from the product receipt

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Guy Terry 28,897 Moderator on at

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RE: Inventory cost calculation

I'll try and test it at the weekend. Are you using discounts on the purchase order header or lines?

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Community Member on at

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RE: Inventory cost calculation

line discount percentage

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Prashant Singh 8,802 on at

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RE: Inventory cost calculation

Dear Ogireddy,

If you will use header discount system will use vendor invoice discount from Accounts for automatic transactions from GL parameter.

If you will put line discount system will use posting profile ledger setup from item group.

But none of the case will hit inventory with discounted amount.

if you want to hit discounted cost you have to have purchase agreement with discounted price.

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Guy Terry 28,897 Moderator on at

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RE: Inventory cost calculation

Hi ogireddy,

I did a test on AX 2012 R3 (although I've no reason to think earlier versions of AX behave any differently).

It is as I thought. If the Item's Posting Profile has a Purchase order Discount account defined, the cost of the item will be based on the Unit price (i.e. Gross price). If the Item's Posting Profile has no Purchase order Discount account defined, the cost of the item will be based on the net amount.

[quote user="ogireddy"]

Discount is not calculated at Product receipt level,but invoice level it is showing discount.

inventory cost is taking from the product receipt

[/quote]

I'm not sure what you mean here. If I put the discount on to the Purchase order before I posted the product receipt, both the Product receipt and the Invoice use the same cost (whether that be gross or net). You can see the cost that is being used on the 'Update' tab of the inventory transaction. When do you enter the discount into AX?

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