Can you apply an Item Charge Invoice to a Subcontracting Purchase Receipt in Microsoft Dynamics NAV?

I received a call yesterday from a client who is running Dynamics NAV 2013 and was getting an error when trying to post an Item Charge Invoice to a Subcontracting Purchase Receipt.

The short answer is that you cannot post an Item Charge Invoice to a Subcontracting Purchase Receipt.  The system is not programmed to do that. However, I can offer up a work-around that will get the same result.

The scenario:

Your company sends out parts to a subcontractor to perform an operation that your company cannot do in-house. You will pay the subcontract vendor for its services, but you must also pay a trucking company for transportation to and from the subcontract vendor.

First, I set up Subcontract Work Centers for the Subcontractor and the Transportation Company. Then I set up a Routing that has both Work Centers.

I then set up a Routing that not only contains the operational step for the Subcontract Service, but also contains another operational step for the Transportation Service.

Figure 1 – Routing for Sub Contract Item containing both Services and Transportation

I then create a Released Production Order for an Item that uses this Routing. These are the Production Order Routing lines.

Figure 2 – Create Production Order Routing

I then use the Subcontracting Worksheet to Calculate the Subcontracts.

Figure 3 - Use the Subcontracting Worksheet to Calculate the Subcontracts

I then Accept the Action Messages to create the Subcontract Purchase Orders for the Subcontracting Vendor and the Transportation Vendor.

Now, when I receive and invoice the two purchase orders, I can see in the Production Order Statistics that I get the costs for both the Subcontract Service and the Transportation Service.

Figure 4 – Production Order Statistics shows the costs for both the Subcontract Service and the Transportation Service

If you would like more information on this subject or another Dynamics NAV subject, please contact ArcherPoint.

Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.

Tracking Production Order Variances in Microsoft Dynamics NAV

I had a question from a client yesterday regarding Production Order Variances. The client was seeing Variances being posted to the General Ledger and wanted to know what was causing them.

Keep in mind that this analysis is only for those items that have a Costing Method of Standard Cost. Also keep in mind that there will be no variances calculated and posted to the General Ledger until the Production Order has been changed to status “Finished” and that the Adjust Cost-Item Entries has been run and the results are posted to the General Ledger.

The first step in the analysis, of course, is to identify a variance in the General Ledger that you want to analyze. In this case we are seeing a Material Variance of favorable 1,444.06 in Production Order PROD00497.

Figure 1 – Identify variance in the General Ledger

The next step in the analysis is to Navigate to the Production Order. Navigate will bring up a list of places where the system has found the document number (the Production Order Number in this case).

Figure 2 – Navigate to the Production Order

We will want to select the Production Order Line and then “Show”.

Figure 3 – Select the Production Order and “Show”

This will bring us to the Production Order that we want to Analyze.

Figure 4 – View of the Production Order

From here I would select “Statistics”.

Figure 5 – Select Statistics for this Production Order

By looking at the Statistics for this Production Order, we can see that the Material Variance agrees with what we are seeing in the General Ledger and perhaps more importantly that the Expected Cost is equal to the Standard Cost. If the Expected Cost and Standard Cost are not equal, it could mean:

• The Standard Cost hasn’t been rolled up correctly
• The BOM and/or Routing have been changed without doing a new Cost Rollup
• The Work Center/Machine Center Rates have been changed without doing a new Cost Rollup
• The Components have been changed on this Production Order
• The Routing has been changed on this Production Order
• If you are using Setup Times in your Routings, the Production Order Quantity is not equal to the Lot Size on the Item Card
• The Standard Cost of a Component in the BOM has changed without doing a new Cost Rollup

In this case, the Standard Cost and Expected Cost are equal so we are looking for a true Material Variance.

Figure 6 – Identify where the variance occurs

To look for a true Material Variance, I select “Line/Components” to get me to the Component List for this Production Order. In this case, it is clearly evident that the Front Wheel has not been issued to this Production Order. If we multiply the Unit Cost of 143.621 times 10 we get 1,436.21, which explains nearly all of the Material Variance we are seeing. The next step in the analysis would be to interview the Production Staff to see how they could build a bicycle without a Front Wheel.

Figure 7 – View of the Line Components of the Production Order

It is a bit more difficult to analyze Capacity Variances. In this case we want to Navigate to the Capacity Ledger Entries for this Production Order.

Figure 8 – Navigate to the Capacity Ledger Entries

When we look at the Capacity Ledger Entries, we can see the Actual Time that was used for Setup and Run Time.

Figure 9 – View of the Capacity Ledger Entries shows the Actual Time for Setup and Run Time

Now if we look at the Routing for this item, we can see the Standard Times. NOTE: Our Production Order was for Quantity 10.

Figure 10 – View of the Routing for the item, showing the Standard Times

This is the analysis that agrees with the 501.60 that we see in the Production Order Statistics.

Figure 11 – Table showing the source of the variances in this example

If you would like more information on this subject or another Dynamics NAV subject, please contact ArcherPoint.

Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.

Understanding Concurrent Capacities on Microsoft Dynamics NAV Routing Lines

There is a field in the Dynamics NAV Routing Line named Concurrent Capacities. The question is, “What is it used for?”

Figure 1 – Concurrent Capacities field in the Dynamics NAV Routing Line

I have set up a simple example to illustrate the use of this field.

First, I created a Work Center named ASSEMBLY. I set the Capacity of the Work Center to 10.

Figure 2 – Setting the Capacity field of the Work Center card

I calculated the Work Center Calendar and can see that the Work Center has a Capacity of 80 hours per day.

Figure 3 – Capacity shown on the Work Center Calendar

I then created a test routing that uses the ASSEMBLY Work Center and has a Run Time of 10 hours.

Figure 4 – Test routing for the Work Center shows a Run Time of 10 hours

I then created a Production Order for the Item using this Routing. If we look at the Production Order Routing Lines we see that the Starting Date is 8/27/14 and the Ending Date is 9/12/14.

Figure 5 – Production Order Routing Lines with Starting and Ending Dates

If we look at the Work Center Load for the ASSEMBLY Work Center, we see that Dynamics NAV only scheduled 8 hours per day, even though we had a capacity of 80 hours.

Figure 6 – Work Center Load for this Work Center shows only 8 hours per day have been allocated, even though NAV shows a capacity of 80 hours

In order for Dynamics NAV to schedule using all of the 80 hours of capacity, we need to set the Concurrent Capacity on the Routing Line to 10.

Figure 7 – Set the Concurrent Capacity to 10 in the Routing Line in order to use all 80 hours of capacity

After I refreshed the Production Order to use the new Concurrent Capacity, we see that the Starting Date is no longer 8/27/14, but 9/11/14.

Figure 8 – By changing the Concurrent Capacity, the Production Order shows an adjusted Starting Date

And if we look at the Work Center Load, we see that the system used the full 80 hours of Capacity in the Work Center to make a schedule for this Production Order.

Figure 9 – Work Center Load now shows full utilization of Capacity to make a schedule for this Production Order

If you would like more information on this subject or another Dynamics NAV subject, please contact ArcherPoint.

Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.

Accounts Payable to General Ledger Reconciliation in Microsoft Dynamics NAV

Are you Running the Microsoft Dynamics NAV Accounts Payable to General Ledger Reconciliation Report?

It is vital that you keep up with Invoicing (Vouchering) in Microsoft Dynamics NAV if you want your system to show the accurate value of inventory and calculate the correct Cost of Goods Sold.

From time to time, I find clients that are not keeping up with their Purchase Receipt invoicing. I can tell this by running the A/P to G/L Reconciliation Report. This report can be found under the Financial Management/Payables menu.

When you run the report, select “Item”.

Figure 1 – Running the Accounts Payable to General Ledger Reconciliation Report

When you run this report, it gives you a list of all of the Purchase Receipts that have not been invoiced.

Figure 2 – The Accounts Payable to General Ledger Reconciliation Report shows a list of Purchase Receipts that have not been invoiced

If you find very old Purchase Receipts on the list and you know that the vendor has been paid, your only option is to invoice the receipt and then issue a Dynamics NAV Credit Memo to get the Payable off the Vendor Aging.

If you would like more information on this subject or another Dynamics NAV subject, please contact ArcherPoint.

Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.

Breaking out Material, Labor, and Overhead for the Balance Sheet and COGS in Microsoft Dynamics NAV

There are companies that desire to break out Material, Labor, and Overhead for their Balance Sheet and for COGS, yet Microsoft Dynamics NAV only has a single number available for Inventory for the Balance Sheet and COGS.

Dynamics NAV has a report that will break down these numbers for all costing methods. It is called the Cost Shares Breakdown.

Figure 1 – The Cost Shares Breakdown report will break down Material, Labor, and Overhead for all costing methods

The report can be run for Sales (COGS), Inventory (Balance Sheet), and WIP (also for the Balance Sheet).

Figure 2 – The Cost Shares Breakdown report can be run for Sales, Inventory, or WIP Inventory

When the report is run, you can see that the various cost elements are broken out.

Figure 3 – Running the Cost Shares Breakdown report breaks out the various cost elements

The shortcoming of this report is that it will only go down to the top level in the Bill of Material.

If you are using the Standard Cost Method and want to get the break out for all of the Bill of Material Levels, you can write a report to get it.

If we look deeper into the item record in Dynamics NAV, we can see the fields for Rolled Up Material, Rolled Up Capacity, Rolled Up Capacity Overhead, Rolled Up Subcontracted Cost, and Rolled Up Manufacturing Overhead Cost.

Figure 4 – View of the Rolled Up costs

The report for the Balance Sheet Inventory would simply be the on-hand quantity times the various cost elements.

The report for COGS would be a bit more difficult as it would have to go through the Item Ledger Entries looking for the type equal to Sales. The report would then multiply the quantity of the sale times the various cost elements.

ArcherPoint has written these reports, as well as reports that automatically create General Journal entries to break these numbers out in the General Ledger.

If you are interested in any of these reports, or for more information on another Dynamics NAV costing topic, please contact ArcherPoint.

Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.

Inventory Valuation by Location Report for Average Cost Item shows Zero on Hand but has a Value

I get the question from clients using the Dynamics NAV Average Cost Method, “Why is there a dollar value when there is zero on hand in a location, but when I run the report for all locations combined, it has a correct value?”

First, we should look at the Inventory Setup. We can see that the Average Cost Calc. Type is set to “Item”.  What this means is that the average is calculated for all locations combined.

Figure 1 – Inventory Setup showing Average Cost Calc. Type set to “Item”

To illustrate, here is an example. I create a purchase order for my average cost item with 10 pieces going into to Location BOB 1 and BOB 2. The unit cost for those going into BOB 1 is 10.00 and those going into BOB 2 100.00.

Figure 2 – Purchase order showing two different locations and different unit costs using Average Cost

I then post and invoice the receipt and run the inventory valuation report for each location.  We can see that the values are correct for each location.

Figure 3 – Inventory Valuation Report showing correct values for each location

I then created a Sales Order to ship the 10 pieces in Location BOB 1. 

Figure 4 – Sales Order to ship 10 pieces all from one location

Now, when I run the Inventory Valuation Report, I get the unexpected results of zero on hand in location BOB 1 with a value of -450.00.

Figure 5 – Inventory Valuation Report now shows zero on hand and a negative value

If you would like to maintain an average cost for locations, you must select Average Cost Calc. Type to be Item & Location & Variant.

Figure 6 – Changing the Average Cost Calc. Type to Item & Location & Variant in Inventory Setup will maintain an average cost for locations

Now, when I run the Inventory Valuation Report I get what I might expect.

Figure 7 – After changing the Inventory Setup, the Inventory Valuation Report yields expected results

When I run the Inventory Valuation Report for just Location BOB 1, I can see that the valuation for zero on hand is equal to zero.

Figure 8 – The Inventory Valuation Report for just location BOB 1 shows zero on hand and zero value…as expected

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

Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.

Understanding Low-Level Code When Running Adjust Cost-Item Entries

or When Running Adjust Cost-Item Entries, why does the Microsoft Dynamics NAV need to know the Item Low-Level Code?

The scenario:

Your company is a manufacturing company and has a Bill of Material that has several levels. Your company has not started to use the Dynamics NAV MRP (Planning Worksheet) functionality yet. You are running the Adjust Cost-Item Entries program on a regular basis. 

So the question is, “Why you would need to run the ‘Calculate Low-Level Code’ program before you run the Adjust Cost program?”

Figure 1 – Selecting Calculate Low-Level Code before running the Adjust Cost program

Looking at the Bill of Material example below, we can see that this structure has 4 levels. When the Adjust Cost-Item Entries program runs, it needs to know the ”lowest level” of an item. This lowest level is represented in the Item’s Low-Level Code. (I discuss Low Level Codes in more detail in the blog, Using Low Level Codes in Microsoft Dynamics NAV.)

In order to know the full cost of Item A, the Adjust Cost program must start at the bottom of the structure and “push costs upward” through the BOM structure levels.  It would start with F and G, then D and E, then B and C, and finally A.

Figure 2 – Diagram of Low-Level Code in BOM structure levels

If you are running the Adjust Cost-Item Entries program without first calculating the Low-Level Code, then the Adjust Cost program is producing incomplete costing results.

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

Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.

How Should the Interim COGS Account be Set Up in Microsoft Dynamics NAV?

I frequently get questions about how the Dynamics NAV Account should be set up.

If we look at the General Posting Setup in Dynamics NAV, we see that there are two setup columns:

• COGS
• COGS Interim

Figure 1 – General Posting Setup in Dynamics NAV

The COGS Interim Account is for items that have been shipped, but not invoiced to the customer. This account should be set up as a Balance Sheet Account as there has been no Revenue recognized, but the items are no longer in the Inventory Account.

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

Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.

Variable and Fixed Overhead Absorption in Microsoft Dynamics NAV

There are Dynamics NAV clients that would like to separate Variable and Fixed Overhead.

If we look at a Dynamics NAV Work Center Card, we see that we can put in a Direct Unit Cost and an Indirect Cost % or Overhead Rate. However, there is no place to indicate if this cost is Variable or Fixed.

Figure 1 – View of the Work Center Card

To accommodate a Fixed Cost Component to the Cost of Production, I start by creating a new Work Center that I have named “FIXED OVERHEAD”. I have set the Direct Unit Cost to 10.00 and the Unit cost Calculation to “Units”.

Figure 2 – Creating a new Work Center for the Fixed Cost Component

I created a new General Product Posting Group called FIXED OH and pointed the Direct Cost Applied Account to a new General Ledger Account that I also called FIXED OH.

Figure 3 – Creating a new General Product Posting Group

I then added a Parallel Operation to the Routing Lines using the new FIXED OVERHEAD Work Center.

Figure 4 – Adding a Parallel Operation to the Routing Lines

To test it, I created a Released Production Order that calls for the routing to which I added the parallel step.

Figure 5 – Creating a Released Production Order that calls for the routing set up previously

After I have changed the Production Order to the finished status, I can see in the General Ledger that it reflects the appropriate Debit to the WIP account and to the Fixed Overhead Absorbed account.

Figure 6 – The General Ledger shows the appropriate values as desired

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

Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.

Specific Costing Method and Serial Number Tracking in Dynamics NAV

Dynamics NAV allows us to choose between FIFO, LIFO, Specific, Average, or Standard Costing Methods (see my related blog, Which Microsoft Dynamics NAV Costing Method Should Manufacturers Choose?) I have not encountered many companies using the Specific Costing Method, but there seems to be some misunderstanding of how the Specific Costing Method requires Serial Number Tracking and vice versa.

The Specific Costing Method is intended for use with high value items and those that are produced or purchased one at a time—for instance, large capital equipment.  Each item in inventory will have its own Specific Cost.  When we choose the Specific Costing Method, we must also choose to use Serial Number Item Tracking.

Figure 1 – Specific Costing is intended for use with high value items and items produced one at a time

Figure 2 – When we choose the Specific Costing Method, we must also choose to use Serial Number Item Tracking

The confusion arises when we want to use Serial Number Tracking and a Costing Method other than Specific.  Some users think that if you want to use Serial Number Tracking, you must use the Specific Costing Method. That is not true. You can use any of the costing methods when you are using Serial Number Tracking, but you must use Serial Number Tracking if you use the Specific Costing method.

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

Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.

Can Items be Deleted in Microsoft Dynamics NAV?

The question often comes up, “Can items be deleted in Dynamics NAV?”

There are two answers:

If there are no item ledger entries for the item, then Dynamics NAV allows the item to be deleted without condition.

But if there are item ledger entries for the item, then Dynamics NAV restricts the deletion to items that have no item ledger entries in an open Fiscal Year.

Figure 1 – Items that have ledger entries in an open fiscal year cannot be deleted

To select deletion candidates, you could run a report that looks for items that have no activity in the open fiscal years.

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

Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.

Stockkeeping Units (SKUs) in Microsoft Dynamics NAV

I often get the question, “What are Stockkeeping Units (SKU’s) in Dynamics NAV and what are they used for?”

First, we need to define what a Stockkeeping Unit is. For the longest time, I thought that the term Stockkeeping Unit was equivalent to the term “Item”. But if we look in the APICS dictionary, we find the following definition:

1. An inventory item. For example, a shirt in six colors and five sizes would represent 30 different SKUs.
2. In a distribution system, an item at a particular geographic location. For example, one product stocked at the plant and at six different distribution centers would represent seven SKUs. 

I now use the definition: “A Stockkeeping Unit is a location specific Item Card.”

The main use for SKU’s in Dynamics NAV is to set up a planning replenishment path in a distribution environment.

In Dynamics NAV, we are able to create SKU Cards for Item/Location; Item/Variant; or Item/Location-Variant.

Figure 1 – Item Card allows creation of SKU variants

If we look at the diagram below, we see that the DAY location is the "Hub" of a distribution scheme and that the remote locations are RAL 1 through RAL 10. If we have customer demand on RAL 10 and RAL 10 doesn’t have adequate inventory on hand to cover the demand, then RAL 10 will need to be replenished from the DAY Location.

Figure 2 – Distribution scheme with hub (DAY) and remote locations (RAL 1-10)

If we look at the Item Card setup for Replenishment System we see that we have the choices of Purchase, Prod. Order, None, and Assembly.

Figure 3 – Choices for Replenishment System on the Item Card

If we look at a SKU Card for Location DAY we see that the replenishment System choices have been changed to include Transfer. For the DAY location, we have selected Purchase.

Figure 4 – SKU Card for Location DAY showing the Replenishment System choices

If we look at the SKU Card for Location RAL 10, we see the same Replenishment System choices. But, in this case, we chose Transfer. And, looking further down, we have selected Transfer-from Code to be DAY.

Figure 5 – SKU Card for Location RAL 10 showing the same Replenishment System choices

We have set up the Reordering Policy on the DAY SKU as Fixed Order Quantity with a Reorder Point of 100 and a Reorder quantity of 1000.

Figure 6 – Setting up the Reordering Policy on the DAY SKU

Now when we Calculate the Plan in the Purchasing Requisition Worksheet we can see that we need to transfer 100 to RAL 10 from DAY, and because the DAY Location is below its Reorder Point the system is recommending that 1000 be purchased into the DAY Location.

Figure 7 – From the Purchasing Requisition Worksheet, choose Calculate Plan to show how many items to transfer to RAL 10 and how many to purchase for the DAY location

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

Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.

Finding the User ID on Inventory Transactions in Microsoft Dynamics NAV

There are times when you would like to know the person’s name that posted an entry to inventory.  When you look at the Item Ledger Entry for the User ID, you cannot find it there.

To locate the User ID for the person who posted the transaction to inventory, drill down on the Cost Amount (Actual) to see the Value Entries for that transaction.  The Value Entry will show the User ID.

Figure 1 – The Value Entry will show the User ID of the individual who posted a transaction to inventory

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

Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.

Rework Production Orders in Microsoft Dynamics NAV

There are times in manufacturing, particularly process manufacturing, where the quality of the output doesn’t meet specifications and needs to be returned to manufacturing for rework.

To accomplish this in Dynamics NAV, you will need to manually create a production order that consumes the batch of output plus any other needed material.

In my example below, a bicycle has been produced, but the front wheel is defective and needs to be replaced.

To start, manually create a production order by populating the header and also a line for the item that needs to be reworked.

Figure 1 – For Rework Production Orders, start by manually creating a production order

Then manually add the bicycle and the front wheel to the production order component lines.

Figure 2 – Manually add the items to the production order component lines

Then consume the bicycle and front wheel and output the finished bicycle.

Figure 3 – Finally, consume the item(s) and output the finished product

Now if we look at the resulting Item Ledger Entries for this Production Order, we see that we have consumed a bicycle to produce a bicycle with the addition of the new front wheel.

Figure 4 – The Item Ledger Entries for this Production Order shows that we have consumed the item with the additions

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

Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.

Phantom Bills of Material in Microsoft Dynamics NAV

There are times when the engineering department will construct a Bill of Material for a functional part of a design, but in production the Bill of Material is never produced as a sub-assembly, but rather is built as part of the final assembly process. A Bill of Material used in this manner is called a Phantom Bill of Material.

Definition taken from the APICS Dictionary:

A bill-of-material coding and structuring technique used primarily for transient (non-stocked) subassemblies. A phantom bill of material represents an item that is physically built, but rarely stocked, before being used in the next step or level of manufacturing. This permits MRP logic to drive requirements straight through the phantom item to its components. This technique also facilitates the use of common bills of material for engineering and manufacturing. Phantom Bills of Material are also known as blow-throughs, transient bills of material or sometimes pseudo bill of material.

Most ERP systems require that a “Phantom Item” be created and a Phantom Bill of Material associated with that item.  The Phantom Item is then placed in a Bill of Material.  When MRP runs or a production order is created, the system “blows through” the Phantom Item and plans only for the components in that Phantom Bill of Material.

Dynamics NAV handles Phantom Bills of Material in a different (and what I think is a better) way.

If we look at a Bill of Material for a bicycle, we can see that there is a front and back wheel in the Bill of Material.

Figure 1 - Bill of Material for a bicycle includes a front and back wheel

Now, if I create a Production Order for a bicycle and take a look at the component list, we can see that the front and back wheel are required to produce the bicycle.  The system assumes that the front and back wheels have been built up previously as sub-assemblies.

To set up a Phantom Bill of Material in Dynamics NAV, you select the option of “Production BOM” when you enter the line for the sub-assemblies.

Figure 2 – Setting up a Phantom Bill of Material

I have selected Production BOM for the type of line for both the front and back wheels.

Figure 3 – Front and back wheel sub-assemblies have been set to “Production BOM”

I refreshed the Production Order, and now when I look at the component lines, I see that the front and back wheel Bills of Material have “blown through” and I only see their components required. When the bicycle is produced, it won’t be using previously built up front and back wheel sub-assemblies, but will be built up as the bicycle is being built.

Figure 4 – Refreshing the Production Order shows the front and back wheel required components

A benefit of handling Phantoms this way is that it is not necessary to create “Phantom Items”.  In Dynamics NAV, a Bill of Material can be stand-alone and not necessarily associated with a parent item.

This method also gives you the opportunity to run the factory lean by not building sub-assemblies ahead of time, but if the need occurs for a service replacement part be produced, it can be done without adding new and unnecessary items to the system.

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

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

Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.

Understanding the Interim COGS Account in Microsoft Dynamics NAV

I frequently see NAV Users who have set up their Interim COGS Account incorrectly. This might not have a significant effect in some cases, but in others it can be.

The purpose of the Interim COGS Account is to record inventory value that has shipped but has not been invoiced to the customer. It is a Balance sheet Account, not an Income Statement account, as some would expect.

If your company ships and invoices in a single step, it doesn’t have an effect. But if you ship then wait before invoicing, it can have a major effect. Some exporting companies wait until the goods have arrived at their destination before booking the revenue. During this time, the inventory has left the perpetual inventory but needs to stay on the Balance Sheet until the revenue is recognized.

Figure 1 – General Posting Setup showing Interim COGS Account

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

Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.

Understanding Expected Cost Posting in Microsoft Dynamics NAV

There is an Inventory Setup in Dynamics NAV to select “Expected Cost Posting”.  In this Blog I will explain what it means and its effects.

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

In an earlier blog, I explained some of general Effects of Inventory Setup, but in this blog I will go deeper into 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 costing topic, please contact ArcherPoint.

Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.

Tracking Non-Conforming Material in Microsoft Dynamics NAV

I 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 I 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, I use the Item Reclassification Journal to move the material out of the main location to MRB.

Notice that I 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 costing topic, please contact ArcherPoint.

Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.

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

I 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.

I start my scenario by creating a Purchase Order for a Bike Frame.

Figure 1 – Create a Purchase Order

I 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 I Navigate on the Item Ledger Entry Document and show the General Ledger Entries, I 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, I need to drill down to the Value entries for the Item Ledger Entry. I now see that there are two Document Numbers that I 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 I take all of the General Ledger Entries to Excel and create a Pivot Table, I 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 costing topic, please contact ArcherPoint.

Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.

ArcherPoint Sessions at NAVUG Forum 2013

NAVUG Forum 2013 will be held in Tampa, Florida, October 22-24. NAVUG Forum is always an excellent opportunity for users to network and learn about Dynamics NAV, regardless of skill level or job responsibility. Several of my colleagues at ArcherPoint will be leading sessions at NAVUG Forum this year, and I will personally be participating in five regular sessions as well as a pre-conference training session on Monday, October 21.

In particular, I want to tell my regular blog readers that I will be conducting a 2-hour, deep-dive session on Manufacturing Accounting for non-accounting professionals (Wednesday, October 23, at 3:45pm).

This session will be directed to Manufacturing and Material Management Professionals who may have had a course or two in accounting, but never got to the advanced courses in cost accounting. This two-hour session will start with the fundamentals of accounting, then progress to manufacturing accounting. At the end of the session, attendees should have a good understanding of “where do these numbers come from?"

If you haven’t registered for NAVUG Forum, time is running out. Go to navugforum.com for more details. And ask your ArcherPoint representative if you qualify for discounts to the event.

While all the sessions at NAVUG Forum will be well worth your time, below are the sessions in which ArcherPoint employees will be participating. See the complete schedule of sessions at: navugforum.com/education.

I hope to see you at NAVUG Forum 2013. And be sure to stop by and see us at booth #533 while you’re there.

Monday, October 21 – Pre-Conference Sessions

Creating NAV Data Sets for SSRS Reports
8:00am – 12:00pm
Two powerful SQL data analysis tools are SQL Server Reporting Services and PowerPivot. Learn how to build NAV data sets for reporting with SQL Server Reporting Services and how to perform analysis with PowerPivot. This is the companion class to Creating Views and Reports with SQL Server Reporting Services, offered during the afternoon sessions.
Michael Heydasch

Advanced Topics in MRP
1:00pm – 5:00pm
This session offers a deep-dive into advanced MRP in Microsoft Dynamics NAV, covering Stock Keeping Units (SKUs), Muli-Location Planning, BOM versions, and an introduction to the new Microsoft Dynamics NAV 2013 planning features.
Bob Bergman

Tuesday, October 22

Ask the Experts: Manufacturing and Supply Chain
10:00am – 11:00am
Spend an hour with a panel of experts as they answer your questions about Microsoft Dynamics NAV for Manufacturing and Supply Chain.
Marc Allman, Bob Bergman, Tom Blaisdell, and Bob Buccigrossi

Wow! My Role Center looks great!
1:15pm – 2:15pm
Make Microsoft Dynamics NAV easier for your users by learning how to define and adjust roles tailored for your users.
Kim Congleton, Tom Taylor

Costing for Manufacturing
1:15pm – 2:15pm
Explore various aspects of Manufacturing Cost Accounting specific to Microsoft Dynamics NAV, including cost rollup, setting direct and indirect rates, depreciation, late paying vendors, and more.
Bob Bergman

Tips and Tricks for Transitioning NAV Classic Users to the RTC and NAV 2013
4:00pm – 5:00pm
Microsoft Dynamics NAV 2013 is based entirely on the RTC and includes many new capabilities. Join us for a view of Microsoft Dynamics NAV 2013 and how the new interface allows you to view information in new ways, while still giving you all of the features that you always loved about Dynamics NAV.
Bruce Kennedy

Wednesday, October 23

ArcherPoint – The World According to Disney
10:00am – 11:00am
Applying the lessons of the Disney Leadership Institute to transform your business and the Microsoft Dynamics NAV Community.
Greg Kaupp, ArcherPoint CEO

NAV Recruiter Forum – Tips, Tricks, and Tools
11:15am – 12:15pm
Finding talented employees for your company is a daunting task. Learn how to add and keep the right members of your team in this informative discussion session, covering sourcing, job descriptions, interview techniques, hiring, and branding the company.
Mark Ward

Ask the Experts – NAV Programming
11:15am – 12:15pm
Do you have questions regarding security in Microsoft Dynamics NAV? Are you trying to figure out segregation of duties? Do you want to know who made changes to your data? Attend this session and bring your questions to our panel of experts, Microsoft MVPs Per Mogensen and Matt Traxinger.
Per Mogensen and Matt Traxinger

Ask the Experts – Costing
11:15am – 12:15pm
Spend an hour with a panel of experts as they answer your questions about Costing in Microsoft Dynamics NAV.
Bob Bergman, Tom Blaisdell, Bob Buccigrossi, David Williams

Get the “Know-How”: Tables, Pages, and Reports
2:15pm – 3:15pm
Microsoft MVP Matt Traxinger will bring a “power hour” of tips and tricks on how to develop a custom application in Microsoft Dynamics NAV 2013. Learn what any NAV user can modify, as well as what kinds of things your programmer teammates can do for you.
Matt Traxinger

Issue Processing and Decision Framing: Getting It Right the First Time
2:15pm – 3:15pm
Join us for an alternative session to help you make better decisions in life, and at work, so you can navigate key junctures with more confidence, and learn how to learn when things don't go right.
Greg Kaupp, ArcherPoint CEO

Deep Dive: Manufacturing for Non-Accounting Professionals
3:45pm – 6:00pm
The session will be directed to Manufacturing and Material Management Professionals who may have had a course or two in accounting, but never got to the advanced courses in cost accounting. This two-hour session will start with the fundamentals of accounting, then progress to manufacturing accounting.  At the end of the session, attendees should have a good understanding of “where do these numbers come from?"
Bob Bergman

The Road to Migration: Classic to RTC
3:45pm – 4:45pm
This session shows you how to plan a migration from the Classic Client to the Microsoft Dynamics NAV Role Tailored Client (RTC), how to gather user requirements, and how to map your current environment to the new RTC Roles.
Kim Congleton

Thursday, October 24

The Technical Side (or, What Not to Forget)
8:00am – 9:00am
How thorough is your checklist of items to address during your upgrade? Have you addressed all your customized objects? (Form Convertor doesn't get everything.) What about dataports and matrices? Those are gone, too, or are handled differently. Do you have any old hardware on the server or end user side that needs upgrading first? Avoid surprises and join us to make sure you have a full checklist for your upcoming upgrade.
Matt Traxinger

Do You Hate Your Mouse? Keyboard Shortcuts to Speed Up Your Work
8:00am – 9:00am
Learn valuable keyboard shortcuts in Microsoft Dynamics NAV to significantly speed up your work.
Kim Congleton

Problem Solving Round Robin
1:15pm – 2:15pm
Join us for this unique session format - the problem solving round robin. Come prepared with a list of problems you're having, and we'll attempt to connect you with expert members of the user community who can help with solutions. This round robin session won't help you solve your problems immediately, but you'll make valuable networking contacts to help you solve them after the session. If you've got a big list, bring it along! The fast pace of this session will point you in the right direction.
Kim Congleton

Hey Developers! Have You Heard the News?
2:45pm – 3:45pm
This session will focus on new technical features for Microsoft Dynamics NAV 2013, including the web client, using the new debugger, database administration, changes to existing programming behavior, and more. If you're running any custom Applications, we'll cover how to make basic modifications to Microsoft Dynamics NAV tables, pages, and reports. We will also discuss how to best assist in the design process when your partner gets involved.
Brett Johnson, Matt Traxinger

Dynamics NAV Manufacturing – Advanced Topics
2:45pm – 3:45pm
Learn advanced techniques for using Microsoft Dynamics NAV for manufacturing, including sales order interface, subcontracting, capacity planning, and MPS/MRP.
Bob Bergman