Updating Standard Costs in Microsoft Dynamics 365 Business Central

 

 

Updating Standard Costs in Microsoft Dynamics 365 Business Central

 

Introduction

Maintaining accurate standard costs in inventory management systems is crucial for reflecting true material costs and ensuring financial accuracy. In Microsoft Dynamics 365 Business Central, updating standard costs involves a systematic approach that ensures all costs are current and properly rolled up from the component level to the finished products. This blog outlines the process of updating standard costs in Business Central.

 

Step-by-Step Guide to Update Standard Costs

Step 1: Update Costs at Component and Capacity Levels

The first step in updating standard costs is to adjust the costs at the component and capacity levels. This can be achieved using the "Suggest Item Standard Cost" batch job, which helps identify and suggest adjustments based on recent purchase prices or production costs. This job is critical for capturing all relevant cost changes that have occurred since the last update.

 

Step 2: Consolidate and Roll Up Costs

Once the individual component costs are updated, the next step is to consolidate these costs and roll them up to determine the total manufacturing or assembly cost of the items. This step is essential for ensuring that the finished goods reflect the total cost of all components and processes involved in their creation.

 

Step 3: Implement the Standard Costs

After the costs are consolidated and rolled up, they must be implemented to take effect. The "Implement Standard Cost Changes" batch job is used at this stage. This job updates the standard costs in the system with those calculated in the previous steps but does not yet affect the financial figures. It's important to note that the new standard costs do not take effect until they are actively implemented in the system.

 

Step 4: Update the Unit Cost Field and Revalue Inventory

The final step is to update the "Unit Cost" field on the item cards and perform an inventory revaluation. This step is crucial as it adjusts the inventory values in the financial records to reflect the newly implemented standard costs. The "Revalue Inventory" process ensures that the financial implications of the cost changes are accurately reflected in the balance sheet and income statements.

 

Updating standard costs in Microsoft Dynamics 365 Business Central is a detailed process that requires careful execution. By following these four steps—updating component costs, rolling up costs, implementing changes, and revaluing inventory—businesses can ensure that their financial records accurately reflect the current cost environment. This practice not only supports better financial management but also enhances strategic planning and operational efficiency.