Inventory costing is one of the most critical functions in business, and business applications as well, many questions are asked about inventory costing and valuation methods during the Diagnostic, Analysis, and Design phases. After going live in the Operation phase transactions are occurred daily, and inventory monthly closing is done.   In this post I will discuss a very important function in Inventory Costing Management of MS Dynamics AX which is Marking Function. During the daily business in inventory management there are some transactions need to be returned in same cost which it was issued, or in sales management there are some sales orders need to be issued (Cost Of Goods Sold – COGS) with specific lot cost. Let us go through the following case:-
  

Date	Qty	Cost	Status	Cost	Avg.Cost
1/1/2012	5.00	100.00	Beginning Balance	500.00	100.00
2/3/2012	2.00	110.00	Purchase - Receiving	220.00	102.86
2/15/2012	1.00	100.00	Issuance-Marking	100.00	106.67
2/20/2012	1.00	102.86	Issuance	102.86	102.86
3/15/2012	1.00	110.00	Sales - Marking	110.00	110.00

 

We have a beginning balance (Qty=5 @ 100EGP), Inventory reception from a purchase order (Qty=2 @220EGP) so the average cost is (500+220)/(5+2)=102.86 There is an issuance (movement) need to be issued in the cost of beginning balance There is another issuance will be issued at current average cost There is a sales order need to be issued in the cost of the purchase order                       


The Marking mechanism in MS Dynamics AX is the built on transactions Lot IDs, the function is found in any inventory transaction form (Purchase Order, Sales Order, Inventory movement,…) . The marking function could be performed manually, and or automatically. Automatically; - Purchase Order return, when creating a credit note that will withdraw quantities from the warehouse in the same cost. - Sales order which has linked Purchase order, where marking the sold quantities cost to the received quantities Manually - Sales order line could be manually marked to a specific reception transaction - Movement Journal In/Out could be manually marked to a specific reception transaction