Dynamics 365 Business Central: Item Costing Part 17, Lot Specific Costing

Dynamics 365 Business Central: Item Costing Part 17, Lot Specific Costing

Hey, everyone, just a quick reminder on the manufacturing training that's coming in three weeks. Check the link underneath. Anyways, we're going to jump into costing This is going to be one of the final videos on the costing, unless I go back into some very specific details. I'm going to brush this topic off right now with just looking at lot costing.

Before, we were actually looking at specific costing. That only works for serials. For tracking, you also have something called lots or lot tracking. That's not going to be specific costing. That's going to be whatever costing you decide but not specific. I'm actually, in my test, going to pick FIFO.

Lots are pretty important. They are sort of specific costing, in my mind, even though you don't say specific costing on the card. Here's the reason why. Let's say if you buy, you do a purchase, for lot AB05 and another one, AB06. Let's say we got ten items here, ten, the quantity, and you have - the unit cost is five on this one and ten on this one. That's going to be 50 and 100 total cost. When you sell, you have to specify the lot. If I'm selling AB05, my cost is going to be five. If I'm selling 06, my cost is going to be six. It doesn't matter if it's a FIFO. I actually specify the lot in the sale. I just did a sale here. It is specific.

Why do I have to say FIFO here? Why is it important to have first-in-first-out if it's specific? The reason is I can actually buy, again, the same lot number, 05, for another 10, let's say for $6 here for 60. Then we actually have layers inside the same lot number, ten, ten, one at five, and one at six. Then it's going to flush out to FIFO.

Oftentimes, you'll just have one lot transaction. That has the one costing, and you specify the costing in sales, so you have that tie in on the costing side, which is useful. It is sort of specific, even though on the card you're not allowed to put specific unless it's a serial. If it's a lot, you have to put one of the other ones. Let's take a look at the system.

Let's take a look at the lot coffee mug. Like I said before, if you specify lot tracking on the item itself, you can't set it as specific. Specific really only works for serial numbers. If it's serial tracked everywhere, then you can use specific. I set up FIFO, and that's pretty much how it works within the lot level. I'm just going to go into the transactions. I generated four transactions for this item to explain how the costing works. If I go into the entries, ledger entries, everybody has seen me do all these purchase orders, sales orders, 100 times, so I'll give you guys a break on that.

Here, I have a purchase for lot number 05, AB05, and that's for 5 - the cost is $500 for 50. It's $10 apiece. Then I have lot number 06, which is twice the price, or twice the cost, which is $20 a piece, $1000 total. Then when I'm selling lot number 06, it picks up the price from lot number 06, which was $20, so 5 times $20 is $100. Then when I sell 05, it picks up from that lot number and becomes 50.

In my mind, it's sort of specific, if you think about. It's by lot. There's a lot. There's cost isolation inside the lot. It's following that. However, probably within the lot, if you - what we're allowed to do is buy in more transactions for the same lot. You've got to move through purchase orders here for the same lot. Within those purchase orders, or within those lines within the same lot, it's going to FIFO because I set it up as FIFO-ing. The isolation level is on the lot. It's pretty interesting. It's a little bit different. It's worth noting.