Microsoft Dynamics AX 2012 R3 Financial Management

Exploring the inventory costing background

For highlighting the inventory costing model in Microsoft Dynamics AX in order to understand the inventory valuation methods, there are three main concepts— physical and financial update, inventory recalculation and closing, and marking.

Physical and financial updates

The physical and financial update considers real-life business scenarios where there is a difference between the reception costs and invoices. It works in uncertain business environments.

Physical update

The physical update represents the inventory transaction, whether it is a product receipt for a purchase order or a packing slip for a sales order. The reception price inherits from the item purchase price in the purchase order and identifies ...