Why Month-End Inventory Close in Dynamics AX 2009?

Posted Wednesday, July 22nd, 2009

Purpose:  To settle transactions between issues and receipts as items can be issued at one value and received at another value.  NOTE:  This does not apply to standard cost method.

Inventory close is no longer required when using the standard cost method.  Differences between the item’s standard cost (used for issues) and receipt transactions will post to variance accounts, as determined, resulting in inventory always valued at the standard cost.

The following points apply to all costing methods except standard costing:

  • Inventory values are based on the running calculated average cost when financially posted.
  • Prior to a receipt being invoiced (financially posted), there can be a difference between the actual (physical) receipt cost and the expected (financial) cost.  When this occurs, the receipt value is known as the floating value.
  • Inventory close settles the initially posted average cost to an item cost based on the inventory model selected (i.e. FIFO, LIFO, Weighted average, etc.).  AX attempts to match issues to receipts based on the inventory model.  If a match cannot be made, an adjustment on the issue will occur to match the receipt cost.
  • When not using the standard cost method, there can be a link made between the item receipt and item issue cost.  Marking is performed to create this link and is considered by inventory close when settling.  Transactions “marked” Inventory dimensions can control the settlement process within a specific dimension, i.e. an item issued in an inventory dimension cannot be settled against another inventory dimension.  To control within a specific dimension, the financial inventory parameter must be selected on the dimension.  This control does apply to the Marking functionality.

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Posted in Dynamics AX, Financial, Trade and Logistics

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2 Responses to “Why Month-End Inventory Close in Dynamics AX 2009?”

  1. Jon says:
    November 23, 2009 at 12:22 pm

    If we change the standard cost of an item during the month, how do the issues get revaluated to the current standard?

  2. Gary Fox says:
    November 4, 2011 at 3:45 pm

    When was the change (what version/SP release) where standard cost no longer needed to be closed?

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