Microsoft Dynamics AX (Archived)

Actual and standard cost for manufacturing

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Posted on by Ahmad Hamdan

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Hi All,

any one can explain how to use actual and standard cost for manufacturing in AX?

I did a lot of researches but i still have some confusions.

Regards,

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Ahmad Hamdan 280 on at

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Any Help

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Weaveriski 23,620 Moderator on at

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What are your detailed confusions, the topic is potentially huge. Basically if you don't use standard costing you are using a form of actual based upon your costing method.

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Brandon Wiese 17,788 on at

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The fundamental difference between using actual cost and standard cost for a manufactured item comes down to what happens when your consumption (material, direct, or indirect labor) varies from the standard.

Any deviation from standard consumption under actual cost causes the inventory receipt of the finished good to adjust accordingly. In other words, the finished good is worth everything you consumed to make it.

Any deviation from standard consumption under standard cost causes a variance (or variances, of which there are different kinds, i.e. quantity, price, lot size, etc.), because the inventory receipt must post at the standard cost regardless of any deviation in consumption to make it.

As a side effect, the scrap account is not used under standard cost, but that's a small detail that most people don't really grasp until they really think it through.

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Brandon Wiese 17,788 on at

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Dynamics AX is a very, VERY strong actual cost system.

Standard cost is more of an afterthought in AX. The system wants to do actual cost everywhere, and just posts variances whenever it can't.

I've never understood why anyone would want to use standard cost at all, let alone in a system that is so good at actual cost.

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Ahmad Hamdan 280 on at

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My question is, which setup in the system that I need to do to inform the system to either use standard cost or actual cost.

as I know, inventory model: FiFo, Lifo and weighted average use actual cost, while standard for standard.

My confusion is how to configure the manufacturing module to use actual cost calculation instead of standard. How to setup in AX? I need only basic steps.

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Ahmad Hamdan 280 on at

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Thank you sir,

I need to know how to setup AX to use Actual cost ?

Does the Item Model Group control this setup or there are any parameters I need to setup in Production Control module?

Regards

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Weaveriski 23,620 Moderator on at

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It uses the inventory model group costing, there is no specific production flag, an item is an item. Labour is specified in the costing version, as are overheads through the costing sheet.

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guk1964 10,888 on at

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See Guy's links here.

https://community.dynamics.com/ax/f/33/t/149630

for Production look into costing sheet, bom calculations, Prod order estimation etc.

Also see this series of blog posts: http://shafeaa.blogspot.ae/2015/08/ax-2012-moving-average-costing-method.html

and

http://www.axpulse.com/tag/production-wip-in-microsoft-dynamics-ax/

Microsoft Dynamics AX 2009 White Paper: Cost Management(white paper)

Microsoft Dynamics AX 2009 White Paper: BOM Calculations Using Costing Sheet (white paper)

There is a rather lot to the subject - try the elearning

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Ahmad Hamdan 280 on at

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Appreciate your response, it is enough.

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Hi!

My organization is implementing Dynamics 365 as its ERP system. We are a medium sized manufacturing company and we intend to import inventory at standard cost into the system, as it fulfills requirements of the other departments. However, as an accountant, I need to show our auditors the actual purchase price of the components on hand (i.e. moving average). Is there a way I can view the moving average price of my current inventory on hand? I believe there must be a way I should be able to see the actual price of the inventory on hand as the PO and vendor invoice are created at the actual purchase price.

Any help in this regard would be much appreciated!

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