Sunday, 25 December 2011

Standard Cost in AX 2009

Using the standard cost model in AX 2009, all receipts and issues are valued at the active cost. Costs are maintained in the item price form, which is available using the Price button from the item form. 
A few things to note when looking at the new price/cost form:
  1. Price type - 3 price types are available for use
    • Cost - This is your standard cost
    • Purchase price - Will be used as a default on purchase order.
    • Sales price - Will be used as a default on sales orders
  2. Version - Costing versions were introduced to provide a way to maintain planned costs. They can be used to plan for future standards and for simulation purposes. Activation of costs/prices can take place at the item level, or can be done for multiple records on the version itself.
  3. Site/Item dimensions - Costs can be maintained per site. Site is an inventory dimension, intended to be used for separate physical locations within a single company. Cost calculations do not cross site. An item should have a cost set up at every site where it will be consumed.
  4. Activation Date - The most recently activated cost is used, and all history is maintained. Activation of a standard cost cannot be backdated.
  5. Pending Prices tab - Anything not yet activated is pending.
Data Model -  In AX 2009, the new and old data models run in parallel:

Existing Data model                  New Data model
InventTrans                  InventCostTrans
InventSettlement                  InventCostTransVariance
InventSum                  InventCostTransSum

Below is an illustration of how the two data models will work together:
  1. ItemA has a standard cost of $100 per unit
  2. I created a purchase order line for the item, quantity 1, with a price of $110, and post the packing slip
    • The voucher for this posting is as follows:
      • $100 - purchase, packing slip
      • $10 - purchase price variance
      • -$110 - purchase, packing slip offset
    • The existing data model will result in an inventTrans record with costAmountPhysical = $100 and an inventSettlement record with costAmountAdjustment = -$10
    • The new data model results in an entry to inventCostTrans. The record will have no cost information because we assume the current active cost is used. OnHandQty and AccruedQty (received not invoiced) are updated with the quantity of 1. There is also a record created in inventCostTransVariance with a cost amount = $10.00.
  3. I posted the invoice with a new purchase price of $120 per unit. Posting the invoice results in the following voucher:
    • -$100 - purchase, packing slip
    • $110 - purchase, packing slip offset
    • $100 - Purchase, receipt
    • $10 - Purchase price variance
    • $120 - Vendor Balance
             The inventTrans record is updated with a costAmountPosted of $120 and inventSettlement  
             will have two new records:
               InventCostTrans has a new entry with costTransState = Financial. Note that the Accrued   
               quantity represents the quantity change in Received not yet invoiced, which now nets to  
               zero when looking at the two records.
               InventCostTransVariance also has a new entry to reflect the additional $10 change in  
               price on the PO line:
  4. The standard cost for the item is changed to $130 per unit. The voucher for the revaluation looks like this:
  • -$30.00 - Inventory Cost Revaluation
  • $30.00 - Purchase, receipt
InventTrans now has a costAmountAdjustment of $10, and there is a new inventSettlement record with an adjustment of $30. To this point, the inventory value was $100, so this settlement brings the value in line with the new activated cost.

inventCostTrans has two new entries and inventCostTransVariance has 1.

Newly introduced variances will capture any difference between an item's standard cost and the actual cost. Here's a breakdown of the new variances:
  • Purchase Price Variance - Occurs when a purchase line uses a price that is different than the standard cost. We saw this in the example above.
  • Cost change variance - With the new framework, there are a few different scenarios that will result in a cost change variance. One example involves transfers across sites. An item may have different costs at different sites. If quantities are transferred across sites where the costs differ, a cost change variance would be posted. Also, a return order may result in a cost change variance if the active cost has changed since the original post.
  • There are also a new set of production variances:
  • Production Lot size variance
  • Production price variance
  • Production quantity variance 

When executing Inventory close in Microsoft Dynamic AX 2009, the system will check whether the item is Standard cost based or not. If the item is standard cost based, the system will created a new record in the table InventCostTransSum. This is the only interaction standard cost based items have with the Inventory close job.

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