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# Formula of cost amount adjustment

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I have a question about the weighted average costing method. How about AX calculate the weighted average for an item? How is the closing inventory for weighted average cost item? In my case, P.O received but not invoiced and our formula for cost price = Physical amount/ Physical Qty. I canâ€™t understand the formula of cost amount adjustment when I run re-calculation.
Help me!

• Hien Hoang 40 on at
RE: Formula of cost amount adjustment

I think I should use "Moving average" for my customer.

• Hien Hoang 40 on at
RE: Formula of cost amount adjustment

Yes, I see.

Thanks.

• Guy Terry 28,454 Super User 2024 Season 2 on at
RE: Formula of cost amount adjustment

Hi Hien,

[quote user="Hien Hoang"]

Could you tell me how to setup adjustment amount  updated all S.O in this case?

[/quote]

You mean you want AX to adjust all the sales in that period (in your example) in the same way?

To do that using 'Weighted average', you would need to have enough financially updated receipts to cover all of your invoiced sales.

Also worth saying.... whilst it may be possible to get only physically updated receipts to be included in inventory recalculation by using a different inventory model (FIFO, for example), only the 'Weighted average' model will value all sales in the same period at the same amount.

• Muthusamy 4 on at
RE: Formula of cost amount adjustment

Hi Hien,

What Guy Terry saying is correct.

For weighted average or weighted average date inventory model, inventory close and settlement functionality used only financially updated transactions, regardless of whether you select the Include physical value check box.

In your case, only last receipt is invoiced and cost price is 11,000 for that.

So, when doing inventory recalculation system takes 11,000 as cost price and updated the remaining amount as adjustment amount.

Thanks,

• Hien Hoang 40 on at
RE: Formula of cost amount adjustment

Hi Guy,

I understood the calculation.

Could you tell me how to setup adjustment amount  updated all S.O in this case?

Many thanks.

• Hien Hoang 40 on at
RE: Formula of cost amount adjustment

HI Ludwig,

The amount is adjusted for the first S.O while running inventory recalculation.

How to setup calculation cost price based on Physical Value when I didn't have Financial amount? I would like cost price be calculated as while having financial cost amount.

Many Thanks.

• Hien Hoang 40 on at
RE: Formula of cost amount adjustment

Hi Muthusamy,

I used inventory recalculation for May 31st and cost price is updated. But it haven't been adjusted as my expectation. My customer have a lot of P.O which received but not Invoiced.

Thanks.

• Guy Terry 28,454 Super User 2024 Season 2 on at
RE: Formula of cost amount adjustment

Hi Hien,

Check here: technet.microsoft.com/.../gg230988.aspx

'When you use the weighted average or weighted average date inventory model, inventory close settles only financially updated transactions, regardless of whether you select the Include physical value check box.'

Inventory close (and, I think, recalculation) cannot use the value of the un-invoiced receipts for costing your sales. The only items which you have that are financially updated receipts cost 11,000 each.

If the 50 you sold cost 11,000 each = 550,000. Which means AX needs to adjust the estimated cost amount (which was -450,000) by -100,000.

Since you actually only financially received 40, if you invoice another receipt for 10 and then run recalculation again, I imagine that AX will revalue that sale of 50 once more.

• Ludwig Reinhard Microsoft Employee on at
RE: Formula of cost amount adjustment

Hi Hien Hoang,

Thank you for sharing this Information.

Can you select the Settlements button in the closing and adjustment form, then select the settled transaction / line and then click on the transaction button?

What do you see there?

Best regards,

Ludwig

• Muthusamy 4 on at
RE: Formula of cost amount adjustment

Hi Hien,

Its look like latest cost price (11000) is updated in item master based on the item set up and the same amount is adjusted while doing inventory recalculation for May 31st.

Thanks

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