First of 5 posts related to item cost in Business Central
Short answer:
On a FIFO item, the Item Card → Unit Cost is a calculated average cost of what you have on hand, not “the cost of the first open FIFO layer.” It’s inventory value ÷ quantity on hand (respecting your average-cost settings), refreshed by cost adjustment and certain postings. (Microsoft Learn)
What does this mean in practice?
- Source of the number: BC totals the item’s Value Entries (actual + expected, if you include expected costs) for on-hand inventory and divides by the on-hand quantity to show Unit Cost. You can drill from the field to Average Cost Calc. Overview. (Microsoft Learn)
- When it updates:
- Running Adjust Cost – Item Entries updates the Unit Cost. (Microsoft Learn)
- During posting of purchases/outputs/positive adjustments, if the net invoiced quantity moves from ≤0 to positive, or if the current Unit Cost = 0, BC updates Unit Cost (using Last Direct Cost in those cases). (Microsoft Learn)
- Settings that shape it: Your Average Cost Calc. Type (Item vs. Item+Location+Variant) and Average Cost Period (Day/Month/etc.) determine how that average is computed and whether it’s per location/variant. (Microsoft Learn)
Bottom line:
Unit Cost on FIFO = the item’s current average cost snapshot. The actual COGS still comes from FIFO layer applications at posting—the Unit Cost is just the preview number you see on pages and lines. (Microsoft Learn)
