Every once in a while, a company will want to change their costing method from whatever they have into something else for whatever reasons.
The official way of changing the costing method for any items in Dynamics 365 (Dynamics NAV) is to basically zero out the item and create a new set of item numbers with the new costing method.
However, doing this may not be feasible because you end up losing all item history, in addition, depending on how much history you have, renaming item numbers will take a long, long time.
There’s an unofficial way that Microsoft does not promote for companies to change the costing method. This is understandable because if the user does not follow the instructions, there’s no way Microsoft can support all of the different scenarios that comes up.
Before the company can make such a change to the costing method, the following tasks has to be done:
The biggest problem that companies run into is documents that are “stuck in the middle”, basically, shipped/received not invoiced. By not having a clean break, if you were to proceed with the costing method change, you will never be able to tie out your inventory valuation to the General Ledger.
Here’s what you will need to do in Dynamics 365 (Dynamics NAV) in order to convert to a different costing method:
Then done, you’re done.
After the costing method change is done, back dating of inventory transactions cannot be allowed.
For example, if we change the items from FIFO to standard on 03/31/2018, no additional postings for these items on or prior to 03/31/2018 should be made. This will need to controlled through the Allow Posting From on the General Ledger Setup and the User Setup.
In addition, revaluation of inventory should not be done prior to 03/31/2018 as well for the items. Doing so may cause irreparable damage on the inventory value and will cause your inventory ledger to not match your G/L.
The method described above is not recommended by Microsoft. I think this is because there are many ways things can go wrong if not done properly.
Having said that, we’ve done this for many of our customers without problems. Strict controls on when the posting is allowed must be followed. If done properly, changing costing method is really not that big of a deal.