Microsoft Dynamics AX Support

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Production cost estimates for raw materials that use FIFO valuation methodology in Dynamics AX 2012 R3

I recently worked with a customer whom was in the process of implementing the Production control module in Dynamics AX 2012 R3. Specifically they were trying to figure out why costs weren’t being estimated on Production orders for Components\Raw materials that used a FIFO valuation methodology. Specifically, the scenario was as follows:

–  The finished good item, FG, used a FIFO Item model group.

–  The component item, COMP, also used a FIFO Item model group.

–  The component item, COMP, had an Inventory movement journal that was posted establishing an On-hand quantity of 100 ea’s at a Cost price of $1.11.

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–  The On-hand for the COMP item reflected a Quantity of 100 ea’s and a Financial cost amount of $111.00, with a FIFO’s Average Cost Price of $1.11.

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– At this point in time, a Production Order is created for the FG Item and the Production order is estimated. When you review the results of the Cost estimation of the FG Production order, the cost for the COMP component item does not get picked up.

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Why doesn’t the Cost estimation for the COMP get picked up on the FG estimated Production order? It doesn’t get picked up on the Estimated Production order because it isn’t able to determine what to estimate an average cost price at that point in time. In order to have the COMP FIFO item to have estimated costs picked up in the Price calculation for the FG production order, one of the following should be true:

1.  If on the COMP item, you have the ‘Use latest cost price’ option marked, then the posting of the Inventory movement journal establishing On-hand quantity of 100 ea’s at a Cost price of $1.11 would have written the cost price record into the INVENTITEMPRICE table. When you do an Estimation on a Production order for FG that involves the COMP item, it would have used that $1.11 INVENTITEMPRICE record and calculated $1.11 Cost price per unit for COMP on the estimated FG Production order.

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2.  If you have a cost price specified on the Manage costs tab of the Released product details form for the COMP item, the estimation of a Production order for FG that involves this COMP item will have picked up the $1.11 cost price.

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For those of you struggling with understanding how FIFO component items costs might be picked up in a Production order estimation scenario, I hope that this helps!