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Dynamics 365 Community / Forums / Small and medium business | Business Central, N... / Business Scenario: Whi...
Small and medium business | Business Central, N...
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Business Scenario: Which Costing Method to use in business central?

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Posted on by joshtechsolutions 4,359
Hi Community,
I would like to find out regarding Costing Method, specifically FIFO and Standard.

My client can't decide which of this 2 costing method to use .

The scenario is like this:

His company purchase medicine from supplier by batches. The medicine all have expiration dates.

1st batch - $20 per bot, 2nd batch $23 per bot.

Now there will be times whereby, the business will have charity events while they are selling the medicines.

The goods for the charity goods can be using the 2nd batch before the first batch is used up.

In this scenario, especially considering the 2nd batch will be used before the first batch, which Costing methods between FIFO or Standard should we use?

Hope this makes sense.

Thank you!
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Business Central
Business Central
Business Central
Business Central
Business Central
  • Jun Wang Profile Picture
    Jun Wang 7,443 Super User 2024 Season 2 on at
    Business Scenario: Which Costing Method to use in business central?
    the answer is actually quite straightforward. BC will auto assign item for transactions using FIFO. BUT user can also manually use apply to item entry to choose which item to sell. In your case, you could pick batch 2 items even there are batch 1 on inventory.
    standard doesn't apply to your case. hope it helps. follow me on linkedin for more sharing. Jun Wang
     
  • Suggested answer
    Ben Baxter Profile Picture
    Ben Baxter 4,908 Super User 2024 Season 2 on at
    Business Scenario: Which Costing Method to use in business central?
    When dealing with Medicine, you are generally tracking a Lot No.  Item Tracking will also come into play with the expiration date tracking.  If you have Lot Specific Tracking turned on, your cost will flow from the Lot Used in the Sale.  So even using FIFO as the Costing Method, the Lot Specific Tracking would apply the specific cost from the Lot to the transaction, which sounds like what you need.
     
    In a Sandbox environment, I would suggest you run some test transactions through and verify the cost is being applied how you want it.  Be sure you either run Adjust Cost automatically, or manually after the transaction, to ensure it applies the costs correctly.
     
    Best Regards,
    Ben Baxter
    Accent Software Inc

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