Unexpectedly High New Standard Cost in Microsoft Dynamics NAV

There are times when you are using the Dynamics NAV Standard Cost Method and rolling up a Standard Cost for a Produced Item you get an unexpectedly high Standard Cost.

A probable cause is that you have selected "Cost Includes Setup" in the Manufacturing Setup and that you have a setup time in a Routing Line but forgot to enter a value for ‘Lot Size’ on the item card.

Figure 1 – Checking or unchecking the “Cost Includes Setup” in the Manufacturing Setup window can affect Standard Cost

From the Dynamics NAV Help for Lot Size on the Item Card:

If the item routing includes fixed costs such as setup time, then the value in this field is used to calculate the standard cost price and distribute the fixed costs of manufacturing the item.

Here is the Routing for the Bicycle Item 1000 that shows Setup Time in the Routing.

Figure 2 – Setup Time in the Routing table

When I roll up the standard cost for Item 1000 with the Lot Size set to zero, I get $533,399.

Figure 3 – Setting the Lot Size to zero…

Figure 4 – …yields a Standard Cost of $533,399

When I set the Lot Size to 10, I get a Standard Cost of $383.099

Figure 5 – Setting the Lot Size to 10…

Figure  6 – …yields a Standard Cost of $383,099

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.