Managing Inventory Costs

Cost management, also referred to as “costing”, is concerned with recording and reporting business operating costs. It includes the reporting of manufacturing costs and inventory costs, that is, the value of items.

Central principles to understand are that costing methods define how items are valued when they leave inventory, that cost adjustment updates the cost of goods sold with related purchase costs posted after the sale, and that inventory values must be posted to dedicated G/L accounts at regular intervals.

The following table describes a sequence of tasks, with links to the topics that describe them.

To See
Read various conceptual information to understand the principles and definitions that govern the inventory costing accounting functionality in Business Central. About Inventory Costing
Ensure that you know the cost of shipped items by assigning added item costs, such as freight, physical handling, insurance, and transportation that you incur after selling. Use Item Charges to Account for Additional Trade Costs
Learn about all mechanisms in the costing system. Design Details: Inventory Costing
Read how inventory periods help a company to control inventory value over time by defining shorter periods that can be closed for posting as the financial year progresses. Work with Inventory Periods
Read why standard costs are often used by manufacturing companies as a valuation base for components and end items. About Calculating Standard Cost
Set up inventory periods, costing methods, and rounding methods. Setting Up Inventory Valuation and Costing
Appreciate or depreciate the value of one or more items in inventory by posting their current, calculated value. Revalue Inventory
Adjust item costs, either automatically or manually, to forward cost changes from inbound entries to their related outbound entries. Adjust Item Costs
Use special costing functions for every-day item transactions in the item operations. Handling Inventory and Manufacturing Costs
Periodically update the standard costs of components, in assembly or production BOMs, and roll the new costs up to the parent item. Update Standard Costs
View and manually change certain item application entries that are created automatically during inventory transactions. Remove and Reapply Item Ledger Entries
Perform period-end control and reporting tasks, such as calculate the value of inventory and post costs to the general ledger. Reporting Costs and Reconciling with the General Ledger
Learn how you can use the job queue to move the tasks for adjusting inventory cost or reconciling it with the general ledger to the background. Adjust and Reconcile Inventory Cost with General Ledger with Job Queue

See Also

Finance
Inventory
Sales
Purchasing
Work with Business Central