Using Inventory Periods in Microsoft Dynamics NAV 2013

Inventory Periods are used in Dynamics NAV for a variety of purposes:

• They preclude inventory Value Changes in a Closed Inventory Period
• They are one factor in setting the “Allow Posting Dates” for closed period entries when running Adjust Cost-Item Entries (see Adjust Cost – Item Entries Program and Prior Period Adjustments in NAV)
• They provide for a diagnostic report when trying to close an inventory period

The online Help definition for Inventory Periods in Dynamics NAV 2013:

Specifies a period of time in which you can post changes to inventory value. An inventory period is defined by the date on which it ends, or the ending date. When you close an inventory period, you cannot post any changes to inventory value, either expected or invoiced, before this ending date, and you cannot post any new values to inventory before the ending date. If you have open item entries in the closed period, meaning positive quantities that have not yet been consumed by (applied to) outbound transactions, you can still apply outbound quantities to these entries, even if the period is closed.

Figure 1 – Screenshot of the Inventory Period Screen in Dynamics NAV 2013 also showing the form for creating new Inventory Periods

One thing to keep in mind about Inventory Periods is that when you attempt to close an Inventory Period, you might get an error saying there are “Open outbound Item Ledger Entries” that need to be resolved. If you have open outbound Item Ledger Entries, you can be sure that your Inventory Valuation for those items is not correct.

Figure 2 – Closing an Inventory Period…

Figure 3 - …Can result in an error indicating you have open outbound Item Ledger Entries

If you get this error message, you can run the test report to see what is causing the problem.

Figure 4 – Run the Test Report to find out what is causing an error

Figure 5 – Inventory Period Test Report results

After you have resolved the “open/outbound” Item Ledger Entry issues, you can close the period knowing you are not carrying forward valuation problems to the next period.

Do you have questions about other functionality in Dynamics NAV? Contact ArcherPoint; we’ll be happy to help you find the answers.

For more step-by-step instructions on how to perform specific tasks in Microsoft Dynamics NAV, see our collection of How-To blogs.

Workflows in Microsoft Dynamics NAV 2016: Business or Psychology?

With elements such as Condition and Response, Microsoft Dynamics NAV 2016 workflows sound much like an experiment between Ivan Pavlov and salivating dogs—when in reality they are a very useful tool to help connect different system users in performing a business task.

Let’s look at some of the options available while implementing workflow into NAV business processes. One of the typically used NAV processes where workflows are needed is in the approval of new documents. Purchase order approval seems to be a popular process among NAV users, and rightly so, as it’s important to keep track of who and how the company money is being spent.

Workflows in NAV can be created from predefined workflow templates. There are roughly 20+ predefined templates to work from, and new workflows can be created from templates with one click. Once you have a workflow, you can use it as is or edit it to facilitate your business process.

Workflows are comprised of lines or steps. Each step has three elements: an event, a condition, and a response, and they work together. For example, the first step of the PO Approval workflow looks like this:

Event: Approval of a purchase document is requested.

Condition: Document Type: Order, Status: Open

Response: There are multiple responses:

1. Add record restriction.
2. Set document status to Pending Approval.
3. Create an approval request for the record using approver type Approver and approver limit type Approver Chain.
4. Send approval request for the record and create a notification.

Let’s break down what is going to happen at this first step when this workflow is enabled.

• Once the user attempts to release the document, the enabled workflow will prompt the user to send an approval request for any PO with Status = Open. The Condition is met, and the Event of Send Approval Request is required.
• Once the Event of Send Approval Request happens, the Response(s) take place.

There are other steps to this workflow geared around the approval itself and some notifications, but let’s see where the opportunity is to enhance this basic PO approval workflow step.

Condition

• Any field in the PO Header or PO Lines can serve as a filter for a condition in this workflow. In the step example above. the only condition being applied from the PO document is that the Status = Open. We could easily add an additional condition/filter of “Buy-from Vendor No.” = xyz. Then the workflow would only invoke the approval process when those two conditions are met.
• Now you have the opportunity to set up multiple workflows for the same business process (PO Approval in this case) driven by different conditions.
• Each of these PO Approval workflows can now have different response(s) as well.

Response

• Let’s look at Response #3. With this response is the ability to pick an Approver Type and an Approver Limit Type.
• Approver Type: can be Approver or SalesPerson/Purchaser as set up in the traditional “Approval User Setup,” or new is the ability to use “Workflow User Groups”. Workflow User Groups can be one or many users and can be sequenced. These groups provide an alternative to the traditional approval chain based on dollar limits.
• This Approval response also has “Due Date Formula” and “Delegate After” fields to manage overdue entries.

Condition and Response are just a few of the opportunities within NAV workflows to make them a fit for your company’s processes. With 20+ predefined workflow templates and the ability to condition how those workflows are invoked, the opportunity to fine tune business processes within NAV using workflows is wide open.

There is even a workflow to manage the overdue notifications. Which when you think about it, those original notifications were created by a workflow. I think we’re back to the question: business or psychology?

Do you have questions about other functionality in Dynamics NAV? Contact ArcherPoint; we’ll be happy to help you find the answers.

You can find all of our “How To” blogs at:
http://www.archerpoint.com/blog/ap-how-to-blog

And be sure to read our Development blogs at:
http://www.archerpoint.com/blog/ap-developer-blog

General Ledger Postings for Microsoft Dynamics NAV Subcontracting

In an earlier blog, we explained the setup for Microsoft Dynamics NAV Subcontracting, and now we will explain the General Ledger Postings for a Sub Contract Production Order.

Quick Start Guide for Setting up Microsoft Dynamics NAV Subcontracting

We have set up a Work Center called SUBCONTRACT that points to the SUBCONT General Product Posting Group.

Figure 1: A screenshot showing a Work Center called SUBCONTRACT, with a General Posting Group called SUBCONT.

Then, in the General Posting Setup, we set the Purch. Account to 53160 (Sub Cont Purchases) and the Direct Cost Applied Account to 53165 (SC Purchases to WIP).

We purposefully used different accounts from the usual Purchases and Direct Cost Applied Accounts so we could track subcontract purchases separately in the General Ledger.

Figure 2: A screenshot showing a general posting setup with a Purchase Account of 53160 and a Direct Cost Applied Account of 53165.

We then went through the process to create a Released Production Order and a Subcontract Purchase Order.

When we Received the Subcontract Purchase Order, the system did not create any General Ledger Entries, but when we Invoiced the Purchase Receipt, the system created the following General Ledger Entries:

Figure 3: Screenshots showing General Ledger Entries reflecting the invoiced Purchase Receipt.

For more information on this or any other Dynamics NAV topic, please contact ArcherPoint.

For more step-by-step instructions on how to perform specific tasks in Microsoft Dynamics NAV, see our collection of How-To blogs.

Unexpected Manufacturing WIP Balances in Microsoft Dynamics NAV

We frequently encounter clients with an unexpected Manufacturing WIP Balance.

In some cases, the WIP balance is below zero.

In the screen shot below, we can see that the WIP account has a negative balance, which in the real world we know cannot be true.

Figure 1 – WIP account shows a negative balance, reflecting an error

When we enter transactions in Dynamics NAV to record the consumption of component parts, we get the following G/L entries:

Dr WIP (Balance Sheet) for the Actual Cost of the Components

Cr Component Inventory (Balance Sheet) for the Cost of the Components

When we enter transactions in Dynamics NAV to record Labor and Overhead, we get the following G/L entries:

Dr WIP (Balance Sheet) for Labor applied at a set rate

Cr Applied Labor (Income Statement) for Labor applied at a set rate

Dr WIP (Balance Sheet) for Overhead applied at a set rate

Cr Applied Labor (Income Statement) for Overhead applied at a set rate

When we enter transactions into Dynamics NAV to record the Output of Finished Items, we get the following G/L entries:

Dr Finished Inventory (Balance Sheet) for the Expected Amount (which is the unit cost from the item card)

Cr WIP (Balance Sheet) for the Expected Amount (which is the unit cost from the item card)

The problem shows up when the Expected Cost is different than the accumulated WIP Balance created by the Consumption and Labor entries.

It is vital that the users change the Released Production Order Statuses to ‘Finished’ in a timely manner. The WIP Balances are not ‘trued up’ until the Production Orders are changed to the Finished Status.

After the ‘True Up’, we end up with the following G/L Entries:

Dr Finished Inventory (Balance Sheet) for the difference between Expected and Actual Cost

Cr WIP (Balance Sheet) for the difference between Expected and Actual Cost

Figure 2 – Changing the Released Production Order Statuses to ‘Finished’ is important to avoid negative WIP values

For more information on this or any other Dynamics NAV costing topic, please contact ArcherPoint.

For more step-by-step instructions on how to perform specific tasks in Microsoft Dynamics NAV, see our collection of How-To blogs.

How to Use the Lanham Duplicate PO Check Feature in Microsoft Dynamics NAV 2016

Lanham introduced functionality within their mapping tool to check for duplicate POs when importing Sales Orders via EDI in version SE060.  This new functionality looks at posted and unposted Sales Orders to determine if the External Document Number sent in on a Sales Order already exists.  It allows you to specify the amount of history you would like to look at and is on a trading partner by trading partner basis.

A new option field called “Validation Type” was added to the mapping tool. This is available at the Element and Conditional levels.  This new field works in conjunction with the “Date Formula” field, which is used to set the timeframe for history to be checked. 

Step by step instructions using Microsoft NAV 2016

On the Element or Conditional that is mapped to the Sales Header field “External Document No.,” set the “Validation Type” to “Purchase Order.” Populate the “Date Formula” field with a negative value (ex. -5Y for the check to look through 5 years of history).

Figure 1:  Element Mapping – Validation Type and Date Formula fields

The following error message will be displayed if a duplicate PO number is found:

Figure 2:  Duplicate PO error

Answer Yes to create PO and ignore error.  Answer No to respect the error and perform any internal follow-up needed.

If you have additional questions regarding this function, contact ArcherPoint.

How to Store Purchase Documents in Microsoft Dynamics NAV 2016

It can’t be that easy …

But with Microsoft Dynamics NAV 2016, it can be!

I just ran across a feature that really amazed me because of how easy it is, so I want to tell everyone.  The feature is storing documents attached to Purchase Orders and Invoices.  In previous blog, I demonstrated how to use the OCR service to help reduce mistakes with Accounts Payable data entry, and I ran across this simple solution to storing documents in NAV 2016. 

In some instances, you will have Invoices and Purchase Orders in which you may want to easily access documents that pertain to them.  These might be sales tax returns that you want to associate with the Invoice that paid them, or documents about materials on a PO that might need quick reference, or a business process where you store requests to review and validate.  There are a number of potential situations that might require you to store documents with Purchase Orders or Purchase Invoices. 

This blog discusses how you can use this feature, and how it can make your life easier using NAV 2016.  You too will be saying, “It can’t be that easy!”

Instructions for storing documents

• Open a Purchase order in NAV and show the Fact Box for “Incoming Document Files.”

• Open a Purchase order and click the “Attach File” button on the Incoming Document Fact Box.

• Navigate to the file that you want to Store in NAV and hit the Open Button.

• To view the document, simply click “View File.”

That’s it.  That easy.  Dynamics NAV 2016 is that easy and that great.

If you want to learn other ways Microsoft Dynamics NAV can make things easy, contact ArcherPoint.

How to Block a Location in Microsoft Dynamics NAV

We have seen some questions on the various Dynamics NAV Forums about how to ‘Block’ a location in Dynamics NAV.

Unfortunately there isn’t a current method to do so, so we offer this work-around. It is not the perfect solution, but it works.

NOTE: This work-around is to not create (or remove) the Inventory Posting Setup for this location.

To begin, we created a location called ‘TEST.’

Figure 1 – Create a new Location

We created a Purchase Order and then tried to receive it into the TEST Location and got the following error:

Figure 2 – Error displayed when trying to receive a Purchase Order into the new Location

Make sure to run Adjust Cost/Post Cost before you delete the posting setup.

For more information on this or any other Dynamics NAV topic, please contact ArcherPoint.

For more step-by-step instructions on how to perform specific tasks in Microsoft Dynamics NAV, see our collection of How-To blogs.

Item Category and Product Group Code in Microsoft Dynamics NAV

There was a question recently on a Dynamics NAV Forum asking, “What is the Product Group Code on the Item Card used for?”

If we look at an Item Card in Dynamics NAV, we see the field for Product Group Code.

Above it, there is a field for Item Category Code.

Figure 1 – Item Card, showing the Item Category Code and Product Group Code

Before we can explain how the Product Group Code is used, we need to explain how the Item Category Code is used.

The Item Category Code on the item is used to classify the item for filtering and reporting. It is also used to set defaults for Costing Method, General Product Posting Group, and Inventory Posting Group.

When a user enters a new item, and enters an Item Category Code, the system will insert the defaults.

Figure 2 – View of Item Category Code options

The Product Group Code is a subset of the Item Category Code and is also used for classifying items for filtering and reporting.

Figure 3 – View of Product Group Code options

Now if someone asks you where you set up the Warehouse Class Code for an item, it is set up in the Product Group Code.

For more step-by-step instructions on how to perform specific tasks in Microsoft Dynamics NAV, see our collection of How-To blogs.

Circular Reference in Microsoft Dynamics NAV Production Bill of Materials

A client called the other day and said that they were getting an error, “Max Levels in BOM Structure on 50 is too high”, when trying to ‘Certify a Dynamics NAV Production BOM’.

This is caused by what is known as a circular reference or an item used on itself.

Figure 1 – Error displayed when certifying a production BOM

When running MRP, the system will be caught in a loop if there is a requirement for Item 1000 that is supplied by Item 1000.

To prevent a circular reference, the certification process checks to see if there is a circular reference and won’t allow the BOM to be Certified if such a reference exists. In this case the problem is easy to see and fix.

Figure 2 – Identifying a circular reference in the BOM

It is a bit more difficult if the circular reference is caused by the item being entered on a lower level subassembly. In this example, we entered Item 1000 on the 1100 Production BOM.

Figure 3 – Circular reference caused when an item is entered in a lower level subassembly

For more information on this or any other Dynamics NAV topic, please contact ArcherPoint.

For more step-by-step instructions on how to perform specific tasks in Microsoft Dynamics NAV, see our collection of How-To blogs.

Understanding the “Order” Reordering Policy in Microsoft Dynamics NAV

We are given the following choices for Item Reordering Policy in Dynamics NAV. The choice affects how the Planning Worksheet (MRP) plans for replenishment of the item.

• Blank
• Fixed Order Quantity
• Maximum Quantity
• Order
• Lot-for-Lot

Figure 1 – List of choices defining how the Planning Worksheet (MRP) plans for replenishment of an item

If we choose ‘Order’, the system will plan one replenishment order for each of the Sales Order Demands in the system for that Item.

If we look at the Dynamics NAV Help for the Reordering Policy Order:

Generates an order for each requirement and does not use the planning period. An automatic reservation between the requirement and the corresponding replenishment order proposal is created.

You need to be fully aware that when using the Order Reordering Policy, the Planning Worksheet doesn’t take into consideration any existing inventory. This means that even though you have enough inventory to cover the sales demand, the system will recommend ordering more.

My advice is to be very careful and fully understand how the Reordering Policy ‘Order’ works before you select it.

For more information on this or any other Dynamics NAV topic, please contact ArcherPoint.

For more step-by-step instructions on how to perform specific tasks in Microsoft Dynamics NAV, see our collection of How-To blogs.

Negative Consumption to Account for By-Product Production in Microsoft Dynamics NAV

It is quite common in Process Manufacturing for a By-Product to be produced at the same time the primary product is produced.

A good way to handle that in Dynamics NAV is to set up an item for the By-Product and give it a costing method of Standard.

Set the Standard Cost of the item at its value.

Figure 1 – Set up an item for the By-Product and give it a costing method of Standard. Set the Standard Cost of the item at its value.

Then put the item on the Prime item’s Bill-of Material with a negative quantity.

Now when we create a Production Order and look at the component list, we can see that our By-Product is listed with a quantity of negative one.

Figure 2 – Put the item on the Prime item’s Bill-of Material with a negative quantity

In the Production Journal, we can change the quantity to the actual amount of By-Product Produced.

Figure 3 – Changing the quantity of the amount of By-Product produced in the Production Journal

When we look at the item card information for the By-Product, we see that the By-Product has been added to stock.

Read about the advantages of Microsoft Dynamics NAV for manufacturing.

For more information on this or any other Dynamics NAV topic, please contact ArcherPoint.

For more step-by-step instructions on how to perform specific tasks in Microsoft Dynamics NAV, see our collection of How-To blogs.

Why do all new Microsoft Dynamics NAV Production Orders have an Ending Date of 12/31/XX?

Around the middle of January every year, we can count on getting questions on why all of the new Dynamics NAV Production Orders that are created have an Ending date of 12/31/XX.

The answer is quite straightforward:

The Work/Machine Center Calendars need to be calculated for the upcoming year.

Figure 1 – Remember to update the Work/Machine Center Calendars for the upcoming year

For more information on this or any other Dynamics NAV costing topic, please contact ArcherPoint.

For more step-by-step instructions on how to perform specific tasks in Microsoft Dynamics NAV, see our collection of How-To blogs.

How to Find Regulatory Features and ISV Solutions for Specific Versions of Microsoft Dynamics NAV

It can be a challenge to find out about localization fixes, regulatory features, and ISV solutions released for Microsoft Dynamics NAV. With NAV 2013, we receive a cumulative update each month that contains regulatory feature updates for most countries. Up until NAV 2009, these updates were released separately.

Microsoft now has a page on PartnerSource, called Microsoft Dynamics Localization Portal - Microsoft Dynamics NAV. Here is what you need to know about it.

What Microsoft says about the page

"​This Microsoft Dynamics Localization portal provides channel partners and customers with country-specific information about localization features for Microsoft Dynamics NAV, including regulatory features, documentation, certifications and information for country-related ISV solutions."

What can you do here?

• View a current list of localizations planned to be released for any designated country by version.
• View and access links related to released country-specific localized features for any designated country by version. This includes​ features released as part of Microsoft Dynamics NAV 2013, NAV 2013 R2, NAV 2015, and NAV 2016—plus, features released subsequent to the main version release above
• View and access links for documentation related to specific countries or specific localization features
• View information on country-related ISV solutions

How often is the page updated?

"The country reports contained within the portal landing page are refreshed every week to ensure information is kept up to date."

Partner Source page link: https://mbs.microsoft.com/customersource/global/nav/support/support-news/GFMLocalizationPortalMC_nav

Sample report for the U.S.:

This page will help you find hotfixes for old version that are required during an upgrade. It also provides information on ISV Solutions.

If you have any questions about this function or other Dynamics NAV questions for any version, contact ArcherPoint.

Read more "How To" blogs from ArcherPoint for practical advice on using Microsoft Dynamics NAV.

If you are interested in NAV development, check out our collection of NAV Development Blogs.

Read more Dynamics NAV blogs by Saurav Dhyani.

PPV is not reversed when issuing a Purchase Return Credit Memo in Dynamics NAV

The item was later returned and a Purchase Credit Memo was issued and posted, but the PPV was not reversed.

We have set up the following example to illustrate:

Figure 1 – Screenshot showing an example of a standard cost item of $2.00

We created and posted a purchase order with the cost of $3.00. This resulted in a Purchase Price Variance of $1.00:

Figure 2 – Screenshot of a posted purchase order with the cost of $3.00, resulting in a Purchase Price Variance of $1.00

We then created and posted a Purchase Credit Memo, which created the following General Ledger entries:

Figure 3 – Screenshot of General Ledger entries created after posting a Purchase Credit Memo

You can see that the Purchase Price Variance has not been reversed and that it has left the Purchases Account and Direct Cost Applied Accounts with a different balance.

For more information on this setup, please see our previous Blog on Exact Cost Reversing.

We again created a posted a Purchase Order to get the same Purchase Price Variance of $1.00.

Figure 4 – Screenshot of a posted a Purchase Order, resulting in the same Purchase Price Variance of $1.00

To reverse the Purchase Price Variance in a Purchase Credit Memo, you must select the ‘Applies to Item Ledger Entry’ that created the original Purchase Price Variance.

Figure 5 – Select the ‘Applies to Item Ledger Entry’ to reverse the Purchase Price Variance in a Purchase Credit Memo

Now when the Credit Memo is posted, the Purchase Price Variance is reversed.

Figure 6 – Screenshot showing that the PPV is reversed when the Credit Memo is posted

For more information on this or any other Dynamics NAV topic, please contact ArcherPoint.

For more step-by-step instructions on how to perform specific tasks in Microsoft Dynamics NAV, see our collection of How-To blogs.

Tooling Amortization in Microsoft Dynamics NAV

Manufacturing companies will often build or purchase production tooling. In most cases the manufacturing company would like to amortize the cost of the tooling by adding the cost to the items produced.

There is no direct way to do this in Dynamics NAV, but we have accomplished this using Dynamics NAV Item Numbers and Bills of Material.

The scenario:

The manufacturing company in this scenario purchased tooling for 10,000 and would like to add $4.00 to the cost of production for the item(s) produced using the tooling.

We created an item number for TOOLING with a Standard Cost of $2.00.

Figure 1: Screenshot of an Item Number created for Tooling at a Standard Cost of $2.00.

The costing method is Standard and uses the newly created Inventory Posting Group of ‘TOOLING’ and the newly created General Product Posting Group of ‘TOOLING’.

Now we set up the Inventory Posting Group and General Posting Setup with the Inventory Account equal to ‘Tooling Amortization’ and the Inventory Adjustment Account also equal to ‘Tooling Amortization’.

Figure 2: Screenshots of an Inventory Posting Group and General Posting Setup with the Inventory Account equal to ‘Tooling Amortization’ and the Inventory Adjustment Account equal to ‘Tooling Amortization’.

Now we do a Positive Inventory Adjustment to add 10,000 of the TOOLING item to stock.

Figure 3: Screenshot of a Positive Inventory Adjustment with 10,000 of the TOOLING item added to stock.

The net General Ledger effect of this transaction is 0.00 because the Inventory Account and the Inventory Adjustment are the same Account.

We add the item to the Production BOM of the produced item.

Figure 4: Screenshot of the item added to the Production BOM of the produced item.

Now when the TOOLING item is consumed in the production process, the Debit goes to WIP Inventory and the Credit goes to Tooling Amortization.

Figure 5: Screenshot showing the Debit in WIP Inventory.

When the total quantity of TOOLING is consumed, then the user will need to remove the TOOLING item from the Production Bill of Material.

For more information on this or any other Dynamics NAV topic, please contact ArcherPoint.

For more step-by-step instructions on how to perform specific tasks in Microsoft Dynamics NAV, see our collection of How-To blogs.

Setting Up Production Lead Time in Microsoft Dynamics NAV if You’re Not Using Routings

There are manufacturing companies using Dynamics NAV that want to offset the start time on production orders to accommodate production time even though they are not using Routings.

To illustrate, we set up a test item.

Note that the item has a BOM, but not a Routing.

Figure 1 – To offset start time on production orders without Routings, start by setting up an item with a BOM but without a Routing

Notice, also, that when we create a Production Order for the item, the Starting Date and the Ending Date are on the same day.

Figure 2 – The Production Order for the item has Starting and Ending Dates on the same day

To add lead time to a Produced Item, enter the lead time into the Lead Time Calculation field on the item card.

Figure 3 – Add Lead Time into the Lead Time Calculation field on the Item Card

Now, when we refresh the Production Order, we can see that the Starting Date is offset to 8/25/14, 20 days before the Ending Date. This sets up your lead time.

Figure 4 – Refreshing the Production Order shows the Starting Time offset by the amount of the Lead Time

For more information on this or any other Dynamics NAV topic, please contact ArcherPoint.

For more step-by-step instructions on how to perform specific tasks in Microsoft Dynamics NAV, see our collection of How-To blogs.

When the Unit Cost and Standard Cost Are Not Equal on NAV Inventory Valuation Report

We received a call recently from a client who said when they run the Dynamics NAV Inventory Valuation Report that the unit cost on the report is not equal to the Standard Cost of the Item.

To illustrate, see the example below.

The Standard Cost for Item 1000 is 427.499, but when we run the Inventory Valuation Report, the Unit Cost is 423.508.

Figure 1 – Standard Cost for an item is shown as 427.499…

Figure 2 - …however, the Unit Cost for the same item is 423.508

The probable reason for the mismatch is that someone rolled up the Standard Cost but did not do an Inventory Revaluation to update the existing inventory value.

If we look at the Item Ledger Entries for this item, we can see that, although we are using Standard Cost, we have ‘layers’ in inventory with a different Unit Cost.

Figure 3 – Item Ledger Entries for the item shows inventory values with different Unit Cost, even though it is set to Standard Cost

If we use the Dynamics NAV Standard Cost Worksheet to roll up the Standard Cost for this item, we see that the new standard is set to 427.499. In addition to that, the system rolled up the standard cost for all of the low level sub-assemblies.

Figure 4 – The Standard Cost Worksheet shows the standard is set at 427.499

Now, when we ‘implement’ the Standard Cost Changes, the system automatically creates a Revaluation Journal.

Figure 5 – Selecting the “Implement Standard Cost Changes” from the Standard Cost Worksheet…

Figure 6 - …causes the system to automatically create a Revaluation Journal

After we have posted the Revaluation Journal, we see that the Inventory Valuation Report Unit Cost reflects the Item Standard Cost of 427.499.

Figure 7 – Now the Inventory Valuation Report Unit Cost reflects the Item Standard Cost of 427.499

The likely cause of the mismatch is that the users are rolling up the Item Standard from the Item Function to Roll Up Standard Cost and are neglecting to then run the Revaluation Journal.

Figure 8 – When Calculating Standard Cost from the Item Card, users must also remember to then run the Revaluation Journal

Figure 9 – Rather than rolling up Standard Costs from the Item Card->Calc. Standard Cost, users are advised to use the Standard Cost Worksheet instead

Our advice is to never roll up Standard Costs from the Item Card, but to always use the Standard Cost Worksheet. When the Standard Cost Worksheet is implemented, it will automatically create a Revaluation Journal.

For more information on this or any other Dynamics NAV topic, please contact ArcherPoint.

For more step-by-step instructions on how to perform specific tasks in Microsoft Dynamics NAV, see our collection of How-To blogs.

Understanding Expected Cost Posting in Microsoft Dynamics NAV

There is an Inventory Setup in Dynamics NAV to select “Expected Cost Posting”.

In an earlier blog, we explained some of general Effects of Inventory Setup.

In this blog we will go deeper into Expected Cost Posting, and  explain what it means and its effects.

Figure 1 - Inventory Setup contains an option to select "Expected Cost Posting"

Expected Cost Posting

The key to understanding how Expected Cost Posting to G/L works is being aware that there can be two types of Value Entries. For instance, when a purchase order is received but not invoiced, Dynamics NAV automatically enters a Value Entry with an expected cost. When that purchase is invoiced, NAV automatically enters a Value Entry that reverses the original expected entry with the expected cost and replaces it with one with the actual costs.

Purchase Order Received, but not invoiced:

• Dr Interim Inventory (Expected Amount)
  • Cr Received but not invoiced Accounts Payable Accrual (Expected Amount)

When the Purchase Receipt is invoiced:

• Dr Received but not invoiced Accounts Payable Accrual (Expected Amount)
  • Cr Interim Inventory (Expected Amount)
• Dr Inventory (Actual Amount)
  • Cr Accounts Payable (Actual Amount)

Ship Order but not Invoiced:

• Dr COGS Interim (Unit Cost)
  • Cr Interim Inventory (Unit Cost)

When the Shipment is Invoiced:

• Dr Interim Inventory (Unit Cost)
  • Cr COGS Interim (Unit Cost)
• Dr COGS (Actual Cost)
  • Cr Inventory (Actual Cost)

From the above you can see that we have both purchase receipts and sales shipments coming out of the same Interim Inventory Account, which may be hard to reconcile to the Inventory Sub-Ledger. There is a report in Dynamics NAV called the “Inventory to G/L Reconciliation Report”. In that report, we will find the “Received but not Invoiced” and “Shipped but not Invoiced”. The Shipped but not Invoiced on the report should tie to the COGS Interim account. If you subtract the COGS Interim amount from the Interim Inventory Account, it should tie to the Received but not Invoiced Amount on the report.

For more information on this or any other Dynamics NAV topic, please contact ArcherPoint.

For more step-by-step instructions on how to perform specific tasks in Microsoft Dynamics NAV, see our collection of How-To blogs.

Tracking Non-Conforming Material in Microsoft Dynamics NAV

We am often asked how to track non-conforming material in Dynamics NAV.

There is no formal NCMR (Non-conforming Material Report) functionality in Dynamics NAV, but we have handled non-conforming material by creating a location named MRB (Material Review Board) and moving material in and out of that location.

Some people would name this location “Quarantine”, especially in the life sciences industry.

Figure 1 – Create a Location Card named Material Review Board (MRB) for non-conforming material

When non-conforming material is found in purchase receiving or during the production process, we use the Item Reclassification Journal to move the material out of the main location to MRB.

Notice that we have used the NCMR number as the document number.

Figure 2 – Use the Item Reclassification Journal to move non-conforming material to the MRB

One of the benefits of using this separate MRB location is that it can be considered a “non-nettable” location when MRP is run.

After the Material Review Board has met and decided on the disposition of the material, the same NCMR number as the document number can be used to move the material to the appropriate location or to dispose of the material, which will provide an audit trail of the NCMR material.

For more information on this or any other Dynamics NAV topic, please contact ArcherPoint.

For more step-by-step instructions on how to perform specific tasks in Microsoft Dynamics NAV, see our collection of How-To blogs.

Hints on Navigating on an Item Ledger Entry in Microsoft Dynamics NAV

We frequently use the Dynamics NAV Navigate tool and Microsoft Excel to verify Item Ledger Entry postings to the General Ledger.

When Navigating on an Item Ledger Entry that involves both a purchase receipt and a purchase invoice, you must do two Navigations to see all of the General Ledger postings.

We start our scenario by creating a Purchase Order for a Bike Frame.

Figure 1 – Create a Purchase Order

We then receive and invoice the Purchase Order in separate transactions that create a single Item Ledger entry of REC0014.

Figure 2 – Receive and invoice the Purchase Order in separate transactions, creating a single Item Ledger Entry

Now, if we Navigate on the Item Ledger Entry Document and show the General Ledger Entries, we only see the Receiving side of the postings.

Figure 3 – Navigate on the Item Ledger Entry Document and show the General Ledger Entries to see the Receiving side of the postings

To see all of the General Ledger Entries, we need to drill down to the Value entries for the Item Ledger Entry. we now see that there are two Document Numbers that we need to Navigate to.

Figure 4 – To see all of the G/L Entries, drill down to the Value Entries for the Item Ledger Entry to find Document Numbers

Figure 5 – Navigate to the Document Numbers

Figure 6 – View the G/L Entries

Now, when we take all of the General Ledger Entries to Excel and create a Pivot Table, we can see that the Postings to the General Ledger are correct.

Figure 7 – Take the G/L Entries to Excel and create a Pivot Table to see that the postings are correct

For more information on this or any other Dynamics NAV topic, please contact ArcherPoint.

For more step-by-step instructions on how to perform specific tasks in Microsoft Dynamics NAV, see our collection of How-To blogs.