In Dynamics D365 F&O/SCM, you might have seen two modules with names that might be confusing at first until you dive deeper into what these modules are about.
The most common mistake business users make is that they often associate cost accounting with defining the rules that apply to direct or indirect costs which are part of a (finished) product, whereas in Microsoft Dynamics D365 F&O the Cost Accounting Module comprises of something else.
In Dynamics D365, defining the costing rules is actually set up/configured in many other modules like the product, inventory, and Cost-Management Module, but not in the Cost Accounting module. A cost accounting module is a reporting tool. It builds a DataMart with a pre-defined ruleset. And although it allows you to define how costs should be assembled and calculated (the rules-set, it does not define the costing model, such as LIFO, FIFO, Standard, Average, etc. This kind of set-up/configuration is performed elsewhere and defines the actual financial value flowing into your ledger accounts, such as Inventory (B/S) and Manufacturing Costs (P&L).
The Benefits of Using the Cost Accounting Module
So, what is the benefit of using the cost accounting module? Well, if you like using the power of Excel, the DataMart built with the cost accounting module allows you to export the data you need to build your Excel Lookups, calculations, etc. But then again you could achieve the same or more by building a Power BI report.
So, if you are looking for an easy, cheap way (cost accounting is included in D365 F&O), to do some cost reporting, then the cost accounting module might be something for you.
However, if you are looking for more advanced, flexible, features, a BI tool could be of more interest.
Either way, the basis is to start with defining the proper costing rules, and although that is something many ERP systems will allow you to configure, it is you who must define them. And that is the hard part. In other words: Define first, Report later.
This excerpt was written by our CEO Danny Thie, to get more ERP insights & Know-hows on Dynamics 365, follow Danny Thie here!
