# what is cost price used for in Inventory Close AX 2012

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Patrick Am posted on 2013-2-25 18:59 rated by 0 users

Hi,  there is a step in the inventory close - Check Cost price?  What is this used for and how does the "deviation percentage" change will affect the issue to receipt settlements?

say if I set the percentage from 30% to 50% on the basis of item cost price, what is the impact?

From what I have researched,  "it is used to determine receipts that will adversely affect the cost price calculation during the inventory close"    Could someone explain perhaps with an example?

Cost price is calculated on the basis of running average prior to close; after close, issue transaction is settled to receipts

say cost price of an item is \$10 at the start,  we purchase 3 times 10 QTY @ different prices \$8, \$9 and \$25 due to high demand at one time. (assuming all receipts invoice updated, )

\$80+\$90+\$250 divided by 30 is the running average = \$14; an issue transaction applied for 30 Qty @ \$14

when check cost price is run with 50% deviation, i assume the receipt @25 will show up. then what steps do we need to take?

how will the cost price is impacted after the inventory close?

thank you

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You can use the Check cost prices report to enter a maximum deviation percentage, and then view the items that will exceed the maximum deviation percentage. The deviation is based on the item cost price, item or median cost price, or median.

For example, an item contains a cost price (using the currency of the United States dollar (USD)) of 5.00 USD. When a purchase order invoice is posted for this item, the cost price entered is 15.00 USD. When printing the report, the maximum deviation percentage that is set will be 30 percent and the item cost price will be used as the base. This purchase order would appear on the report because the cost of the item posted, 15.00

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You can use the Check cost prices report to enter a maximum deviation percentage, and then view the items that will exceed the maximum deviation percentage. The deviation is based on the item cost price, item or median cost price, or median.

For example, an item contains a cost price (using the currency of the United States dollar (USD)) of 5.00 USD. When a purchase order invoice is posted for this item, the cost price entered is 15.00 USD. When printing the report, the maximum deviation percentage that is set will be 30 percent and the item cost price will be used as the base. This purchase order would appear on the report because the cost of the item posted, 15.00

“Any fool can know. The point is to understand.”
Albert Einstein

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You can use the Check cost prices report to enter a maximum deviation percentage

Why we need to know the maximum deviation percentage and how it is related to business scenerio ?

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You do not need to know it, but it is a tool used where the received cost diverges from the current cost, which in itself will create costs and cause impacts, so if the usual cost is \$10 and the user accidentally enters \$100 this would be outside of a 30% deviation (as an example) and would highlight that there is a potential rogue transaction adveresely impacting on cost - it is an early warning system for finance at close.

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Hi Patrick,

This report allows you to enter a maximum deviation percentage. Items that appear on this report will be only those exceeding  the maximum deviation percentage. The deviation is based on the item cost price, item or median cost price, or median.

Hope this helps,

Shantanoo, Barry-Wehmiller International Resources

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You do not need to know it, but it is a tool used where the received cost diverges from the current cost, which in itself will create costs and cause impacts, so if the usual cost is \$10 and the user accidentally enters \$100 this would be outside of a 30% deviation (as an example) and would highlight that there is a potential rogue transaction adveresely impacting on cost -

it is an early warning system for finance at close.

Hi Steven ,

As you said if the usual cost is \$10 and the user accidentally enters \$100 this would be outside of a 30% deviation , Can i know when the system gives the warning Is it during the PO creation or packing slip ?

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the warning is on the inventory close highlighted as a comment. No impact on user entry of PO or receipt etc. Invoice controls would pick this up so really it is for received not invoiced stock.

“Any fool can know. The point is to understand.”
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Hi Steven Sir ,

I am not able to understand the use of the functionality , can you explain in detail about the functionality usage ?

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I can only suggest you read the manual and run through the process. It is an early warning built into one specific process of a potential issue. It does nothing but warn you.

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I can only suggest you read the manual and run through the process. .

Could you share the manual name ?

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I shared the link earlier in this post.

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