In this blog I’m going to discuss the setup preliminary requirements specific to the BOM calculation.

I will be discussing the following today:

  • Costing Version
  • Cost Group
  • Calculation Group

Costing Versions can be setup  from Inventory and Warehouse Management-Setup-Costing-Costing Versions.


Costing versions in Microsoft Dynamics AX are primarily used for the following two purposes:

  • Standard cost: becomes the basis of the standard costing if the inventory valuation method is set to ‘Standard costing’.
  • Planned cost: planned cost is used preliminary for production cost planning. It is been used also at the time of production order estimation. Thus it becomes the basis of cost variance analysis for a given production order.

Here select the Costing type and enter a Version and Name. Select the costing type as ‘Planned’ if the purpose is to use this costing version only for planning purposes. Set the appropriate value in the Block activation field. If you don’t want the user to activate the price then set it to ‘Yes’.


Next step is to setup the costing groups from Inventory and Warehouse Management-Setup-Costing-Cost groups

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The most important thing to identify is the cost group type. It can have the following possible values:

Cost group type Typical usage
Direct material Assigned to the raw materials used in the production. It can be assigned on the item master.
Direct manufacturing Assigned to the production categories to track the direct manufacturing hours.
Indirect Indirect manufacturing cost calculated through appropriation in the costing sheet.


Then on the Profit tab select the setting for Profit. Profit setting can be specified in the % and is used to calculate the sales price of the finished good on basis of the cost price.

Now go to Product Information ManagementReleased Products

Open the Released products form for the raw material and assign the appropriate cost group to the item. You can only assign the cost group of type ‘Direct material’ to the item master.

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Next step is to create a calculation group from Inventory and Warehouse Management-Setup-Costing-Calculation Groups

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Calculation group once created can be assigned to the BOM item on the Released product form. The purpose of the calculation group is only to default the calculation settings on the BOM calculation form at the time of BOM calculation.


You can assign the calculation group to the BOM item from the Released products form as shown below:

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This completes the preliminary required setup for the BOM calculation. In my next blog post I am going to discuss how to apply the indirect cost to the production order and BOM using the costing sheet in Microsoft Dynamics AX 2012. Till then – happy DAXing!!

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