The Cost Explorer is one of the most overlooked tools provided in Dynamics 365 for Operations. Cost Explorer is used in conjunction with inventory close to help clarify the adjustments made. It allows you to see the cost rollup of items in the Issue Closed (IC) status. (An inventory close is needed in order to change inventory to a closed status.)
Cost Explorer Terminology:
Let’s start by getting you used to the terminology used in Cost explorer and the Tree format.
IC – Issue closed. An IC is an issue that has been settled and is officially closed. A full tree is available for IC transactions.
IO – Issue open. An IO is an issue that is pending close. You can’t drill down further with an IO transaction.
RT – Receipt. A receipt is when the receipt origin has been adjusted.
RO – Receipt Origin. RO is an unadjusted receipt; this is the lowest level or initial entry of the receipt, therefore, you can’t drill down any further.
ADJ – Adjustment. ADJ shows the adjustment lines such as charges that change the cost price of an item.
RC – Route consumption. This line is the production route costing.
Cir – Circularity. You can’t drill down any further because this line is based on the cost of itself.
Each of the lines has the same path and that path is recorded at the base of the Cost Explorer for your benefit as you review the costs.
Cost Explorer is available through your transaction and transaction details screens. There is an “INVENTORY” tab that provides a Costing section. (See Figure 1) Cost explorer is active when the line that you have highlighted fits the criteria.
When you open Cost Explorer, if the transaction is in the status IC (issue closed), you will be able to expand the tree. You could see status RO (receipt origin) if no adjustments have been made. When adjustments are made, another tree is created for RT (receipt). The RT tree will contain everything that rolls up from the RO to the RT in order to total all the cost. ADJ (adjustment) lines show any of the that were initiated by controlled changes or automatically applied through the inventory close.
Cost Explorer is available for use with Sales order transactions, Production order transactions and Transfer order receipts. Figure 2 is an example of a Sales order issue. Purchase order #44 is showing that 10 items “AX FIFO” were purchased for $20.00 each or a total of $200. The formal Receipt (RT) is showing the adjusted cost of $20.25 per unit.
When looking at the Adjustment line in Figure 2, you will notice that there are not any references telling us where the adjustment was made. That is because this was an adjustment made using the “closing and adjustment” section of the Inventory Management module. Those adjustments are not visible in a traditional adjustment journal.
Figure 3 below shows an example of a Cost Explorer tree for a produced item. Notice how it rolls up the raw materials, raw consumption, and adjustments that happen in the production process. This allows you to drive down easily from the item when you see a produced item which has an unreasonable cost. When you see the item with the bad cost, you can drill down through transactions>inventory>cost explorer to see what caused the cost price to veer from the expected cost.
The Cost Explorer tool is a significant tool in researching inventory costs at the transaction level. It is available after inventory close and for closed issue transactions.