Adjust cost item entries in Business Central: what it does and when to run it

Why adjust cost item entries in Business Central exists

When you sell goods, Business Central must post a cost straight away. That holds even if the purchase is only received and not yet invoiced. Later, the invoice arrives at a different price, or freight comes in as an item charge. The inbound entry now has a new cost. But the sale still carries the old one.

The batch job closes that gap. It finds every inbound entry whose cost changed. Then it pushes the difference forward to the outbound entries linked to it, as adjustment value entries. It never edits posted entries. It adds new ones. So you keep an audit trail of every cost change.

How costs are forwarded to sales

Item application entries record which receipt supplied which shipment. For FIFO, LIFO and specific costing, the link is direct, and the adjustment follows it. For the average method, the job recalculates the average for each period set in the Average Cost Period field. It then applies that figure to every outbound entry in the period.

Transfers, assembly output and finished production orders work the same way, level by level. So a cost change on a raw material can travel through a subassembly to the finished item and on to its sale. Items that still wait for adjustment show the Cost is Adjusted field switched off on the item card.

Running the batch job by hand or on a schedule

Search for Adjust Cost - Item Entries. Leave the filters blank to cover all items. Then choose whether to post to the general ledger in the same run. Many companies add the job to the job queue so it runs overnight. That keeps daytime posting fast. It also means margin reports are current each morning.

The other route is Automatic Cost Adjustment on the Inventory Setup page. Set it to Always, and the adjustment happens as each document posts. Options such as Day, Week or Month limit how far back it looks. This suits smaller item ledgers. But it can slow posting in busy databases, so test it in a sandbox first.

From adjusted costs to the general ledger

The adjustment changes value entries in the inventory subledger. The general ledger then follows in one of two ways. With Automatic Cost Posting on, each value entry posts to the inventory and cost of goods sold accounts at once. With it off, you run Post Inventory Cost to G/L as a separate step.

At period end, the order matters. First, adjust costs. Second, post inventory cost to the ledger. Then compare the inventory valuation report with the inventory accounts. If they disagree, the cause is usually a direct journal posting to an inventory account or a change in posting setup. It is rarely the adjustment itself.

When the Business Central adjust cost job misbehaves

A run that takes very long, or seems never to finish, usually points to backdated postings, negative inventory or loops. In a loop, items are used and made in a circle. Selling before you post receipts creates entries with no source cost. Each one needs a second look when the receipt finally lands.

Good habits prevent most of this. Post receipts before shipments. Avoid backdating into old periods. Close inventory periods after each month. Run the job often, so every run stays small. If cost of goods sold moves in ways your team cannot explain, our consultants can trace the value entries with you.

Questions on the Business Central adjust cost batch job

How often should adjust cost item entries in Business Central run?

Run the job often enough that each run stays small. Many companies schedule it nightly through the job queue. They also run it once more before they close the period. Long gaps make the job slower and leave margin reports out of date. So pick a steady rhythm that fits your posting volume, and then watch how long each run takes.

Why did cost of goods sold change for a sale posted last month?

A purchase invoice, item charge or revaluation changed the cost of the goods that you sold. The adjustment posts the difference as a new value entry. Its posting date follows your allowed posting dates and your inventory period settings. So if this surprises your team, look at the value entries for that item first.

Should we turn on Automatic Cost Adjustment?

It suits lower volumes, where up-to-date costs matter more than posting speed. Busy databases usually keep it set to Never and schedule the batch job instead. Try both routes in a sandbox copy. That shows you the effect on posting times before you change anything in the live company.

Does the batch job post to the general ledger?

In Business Central, the Adjust Cost Item Entries job posts to the ledger only if you select that option or have Automatic Cost Posting on. Otherwise, it updates value entries alone. The separate Post Inventory Cost to G/L batch job then moves the amounts to the ledger. So at month end, run both jobs in order, and check the inventory accounts against the valuation report.

Can we run cost adjustment for just one item?

Yes. The batch job accepts an item number filter or an item category filter. That is handy for checking one item after a correction. For the period close, run the job without filters, so nothing slips through. If a single item keeps showing as not adjusted, look for backdated or negative entries.

Related guides on Business Central inventory costing

The Adjust Cost Item Entries job in Business Central is one part of inventory costing. These guides explain costing methods, expected cost and how unit cost is worked out. They also show where the adjustment sits in the month-end close. Read the costing methods guide first, then return to schedule the batch job with a clear view of your own setup. For the product detail, see Microsoft's design details on cost adjustment.