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Dynamics 365 Community / Forums / Microsoft Dynamics AX (Archived) / COGS of Item
Microsoft Dynamics AX (Archived)

COGS of Item

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Posted on by Community Member

Hi all expertise,

Currently I am using AX2012.

Lets say now I create one purchase order for Item A. After one week, I post the GRN.

After posting the GRN, I sold out that item by doing sales order, pick and pack, and sales invoice.

So in this case, what is my COGS?

Please advice.

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  • Verified answer
    Brandon Wiese Profile Picture
    Brandon Wiese 17,788 on at

    If the item A is standard cost, then there's no question, so let's assume item A is some form of actual cost (weighted average, FIFO, LIFO, etc.).

    The COGS for the sales order is the total on-hand value divided by the total on-hand quantity, if both are positive.  If either is negative, then it's the current cost price on the item A.

    Now what constitutes on-hand value and quantity can vary a bit.  For example, it matters how you have configured your inventory dimensions for financial cost (per site, per warehouse, etc.).  It also matters if you have checked the Include physical value option on the Item model group for the item.  If so, then the Goods received note, which is presumably not yet invoiced in your example, would be included in the on-hand value and quantity calculation.

    Then later an Inventory recalculation or close may adjust the COGS of your sales invoice according to your actual cost model, especially if posting the vendor invoice for the PO changed the cost value of the packing slip, or if the recalculation/close process associated the issue with a different receipt or receipts, etc.

  • Community Member Profile Picture
    Community Member on at

    Thankyou so much for your explanation Brandon.

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