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Wanted to change the costing method from Weighted Average to FIFO

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Posted on by Andrew T

Please direct me to the right forum channel if this is not correct. We are using Dynamic 365 F&O [Installed product version : 10.0.36 (10.0.1695.78)]

The organization would like to change the existing setting of the costing method from Weighted Average to FIFO with effective from next financial year which is Jan2024. I am seeking advice for the proper procedures to implement the change. Thanks.

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André Arnaud de Cal... 301,037 Super User 2025 Season 2 on at

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Moved the question to the Dynamics 365 Finance forum.

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Kevin Xia Microsoft Employee on at

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Hi,

You can refer to this official document: FIFO with physical value and marking - Supply Chain Management | Dynamics 365 | Microsoft Learn. First in, first out (FIFO) is an inventory management and valuation method where inventory that is produced or acquired first is sold, used, or disposed of first. During the inventory close process in Microsoft Dynamics 365 Supply Chain Management, the system will create settlements where the first receipt is matched against the first issue, and so on.

Best regards,

Kevin

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BillurSamdancioglu 19,703 Most Valuable Professional on at

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TO be able to change an inventory method, then the balance of that inventory needs to be zero and the need to run closing.

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Andrew T 9 on at

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I done some study knowing that if we are changing from FIFO to Weighted Average, need to run the closing because system will recalculate the unit cost for each issuing transaction. We are practicing this in every month end closing for another entity which using FIFO as the current costing method.

However, for this entity which using Weighted Average as the current costing method, there is no month end closing has been carried out since day 1 because D365 standard process is using the average costing method for every single issuing transaction. With this, I am wondering what is the purpose to run the month end closing and zero all the quantity, then to re-enter the quantity after changing to FIFO costing method? Can't we just switch the costing method overnight?

Thanks for your review and feedback.

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