Standard & Charge Item Cost Treatment

How it works

For Standard Cost items, the inventory value cannot be changed from the Standard Cost. At the point of transfer receipt, Business Central will post the stevedore cost using an Item Charge Value Entry but Business Central will adjust the cost back to Standard Cost immediately and push the cost to the Purchase Variance account.

When the stevedore invoice arrives, an Item Charge Value Entry will again be posted with any Variance from the expected cost, which will follow the same path as stated above ensuring that the item is valued at Standard Cost.

Stage 1 - Transfer Receipt

Business Central posts the transfer and the Landed Cost for stevedore is posted using a Value Entry, which is then moved using a G/L correction to the Landed Cost accrual account. Standard Business Central functionality re-values the item to Standard Cost.

Balances: Invt. Accrual (Interim) (Landed Cost) 5.00 Cr ~ Purchase Variance 5.00 Dr

Stage 2 - Landed Cost Invoice

When you set the Landed Cost Type Code on the purchase invoice line, Clever automatically sets the line to Type = G/L Account with the account set to the Purch. Account from the Charge Item’s General Posting Setup. 

This stage involves multiple coordinated postings where BC posts the vendor invoice and Clever Landed Cost functionality posts G/L corrections to reverse the receipt accrual and route variances to the correct accounts. An Item Charge Value Entry will be created for the actual cost which will finally be adjusted to bring Inventory back to Standard Cost.

Final Position

The item’s inventory cost stays at the Standard Cost. The net variance of 8 is posted to the Purchase Variance account via the Charge Item’s posting group. This is consistent with how Business Central handles all item charge variances against Standard Cost items. Cost of Goods Sold when inventory is sold will also be stated at the Standard Cost.