the following today:

Costing Version
Cost Group
Calculation Group

Costing Versions can be setup from Inventory and Warehouse Management-Setup-Costing-Costing Versions.

Costing versions in Microsoft Dynamics AX are primarily used for the following two purposes:

Standard cost: becomes the basis of the standard costing if the inventory valuation method is set to ‘Standard costing’.
Planned cost: planned cost is used preliminary for production cost planning. It is been used also at the time of production order estimation. Thus it becomes the basis of cost variance analysis for a given production order.

Here select the Costing type and enter a Version and Name. Select the costing type as ‘Planned’ if the purpose is to use this costing version only for planning purposes. Set the appropriate value in the Block activation field. If you don’t want the user to activate the price then set it to ‘Yes’.

Next step is to setup the costing groups from Inventory and Warehouse Management-Setup-Costing-Cost groups

The most important thing to identify is the cost group type. It can have the following possible values:

Cost group type	Typical usage
Direct material	Assigned to the raw materials used in the production. It can be assigned on the item master.
Direct manufacturing	Assigned to the production categories to track the direct manufacturing hours.
Indirect	Indirect manufacturing cost calculated through appropriation in the costing sheet.

Then on the Profit tab select the setting for Profit. Profit setting can be specified in the % and is used to calculate the sales price of the finished good on basis of the cost price.

Now go to Product Information Management-Released Products

Open the Released products form for the raw material and assign the appropriate cost group to the item. You can only assign the cost group of type ‘Direct material’ to the item master.

Next step is to create a calculation group from Inventory and Warehouse Management-Setup-Costing-Calculation Groups

Calculation group once created can be assigned to the BOM item on the Released product form. The purpose of the calculation group is only to default the calculation settings on the BOM calculation form at the time of BOM calculation.

You can assign the calculation group to the BOM item from the Released products form as shown below:

Costing Sheet Setup

In my last blog I discussed the setup of,

Cost Groups
Costing Versions
Calculation Groups

In this blog I’m going to discuss setup of Costing Sheet

After the completion of the setup of above, the next step is to setup costing sheet

Costing sheets are used for calculation of indirect cost and it displays the information for the manufactured item or production order in accordance to the cost group break-up. As a matter of fact you can only setup one cost sheet per AX company.

For that Go to-Inventory Management-Setup-Costing-Costing Sheets

On the Root node Right click-Create

Under Setup-Type

Select-Cost of Goods Manufactured.

Enter a Code and Description

Check Header to display line as header

Check Total to display line as total. The total indicates that this node is going to be used to total all the underlying costs. Finished goods cost may comprise of the following:

Direct material cost
Direct manufacturing cost
Indirect cost

I am going to discuss how to setup each type of cost as following:

Direct material cost

The source of direct material is the production BOM or formula. It is the cost of the raw material used in the BOM or formula.

Now, I am going to show you how to setup the total direct material cost in the costing sheet.

Select the COGM node created above and right click on it. Then select ‘Create’ from the options.

Create a total node as above and give this node an appropriate name like ‘Materials’ for example.

Now, select the ‘Materials’ node and right click. Create a new node of type cost group. Provide the appropriate name to the node like ‘COGM-M’ for example. Select the appropriate cost group under setup field group. Since you are currently accumulating the direct material cost that’s why it is recommended to add the cost group of type direct material only.

Repeat the above step for each and every direct material cost group you want to track on your costing sheet.

Direct manufacturing cost

The source of direct manufacturing cost is the configured production route for the BOM or formula items. The cost is calculated based on cost categories and times configured on production route or entered as part of the route card or job card journals.

The steps required to configure the manufacturing cost is same as explained above. The only difference is that the cost group of type direct manufacturing must be selected.

Indirect cost

Indirect production cost can only be setup and calculated through costing sheet only.

Create the total node like previous and assign it a meaningful name like ‘Overheads’ for example.

In Microsoft Dynamics AX overheads can be calculated as either surcharge or rate. Surcharge are specified in terms of % and can only be applied to the direct material cost nodes. Whereas rate is specified as amount and can only be applied to the direct manufacturing nodes.