3rd of 5 posts related to item cost in Business Central
Great question. Short answer.
The Unit Cost (LCY) you see on a sales line is just a preview pulled from the Item’s current Unit Cost—it does not look at the “first open FIFO layer.” The actual COGS is determined at posting by applying the shipment to open entries per your costing method.
What fills “Unit Cost (LCY)” on the sales line?
- When you add an Item to a sales line, BC copies the Item → Unit Cost into Sales Line → Unit Cost (LCY).
- For Standard costing, that’s the Standard Cost.
- For FIFO/Specific/Moving Avg./Average, it’s the item’s current calculated Unit Cost (maintained by BC based on your costing setup). It’s mainly used for margin/profit preview on the order.
Re-validating the Item No., Location, or running “Recalculate Lines” can refresh that preview value, but it’s still a preview.
Where does the real cost come from?
- When you post (Ship or Ship+Invoice), BC applies the outbound entry to positive item ledger entries according to the costing method:
- FIFO → earliest open positive entries by posting date/time (and respects item tracking).
- If the sale spans multiple layers, BC splits the cost accordingly.
- After posting, Adjust Cost – Item Entries finalizes/propagates costs to COGS and the G/L.
Can I make it use a specific receipt (not just the next FIFO layer)?
- Yes—fix the application before posting:
- Use reservations / select entries (or, with tracking items, choose the specific lot/serial). That binds the sale to a particular receipt entry, overriding automatic FIFO for that line.
How to verify what happened
- Open the Posted Sales Shipment/Invoice → Line → Item Ledger Entries / Value Entries to see exactly which receipt entries were applied and at what costs.
- If numbers look off, run Adjust Cost – Item Entries and recheck the Value Entries.
Bottom line:
- The sales line Unit Cost = a snapshot from the Item’s Unit Cost (for margin only).
- The posted cost = from applied FIFO layers at posting (what actually hits COGS).
