Cost accounting in Microsoft Dynamics 365 Finance lets you collect data from various sources, such as the general ledger, subledgers, budgets, and statistical information. Then, you can analyze, summarize, and evaluate cost data so that management can make the best possible decisions for price updates, budgets, cost control, and so on.

In this module, you'll learn how to get started with cost accounting in Finance. Additionally, you'll learn about the Cost control workspace and how to create a cost accounting report by using the Cost accounting Get started wizard.

The source data that's used for cost analysis is treated independently in cost accounting. Therefore, updates in cost accounting don’t affect the source data. However, when you collect cost data from various sources, and especially when you import the main accounts from General ledger in Finance as cost elements, data redundancy will occur because the same data exists in General ledger and Cost accounting. The data redundancy is required because you'll use financial management for external reporting and cost accounting for internal reporting.

Cost accounting process flow

The cost accounting process flow consists of setup, ongoing data imports, rules to perform allocations, and user reviews of resulting data. This module will focus on using data from Finance.

The Cost accounting Get started wizard is the best way to begin the setup. The wizard helps you prepare the cost accounting environment for use. You can run the wizard by going to the Cost accounting module, selecting the Setup group, and then selecting the Get started menu item.

Throughout each period, you can import data into the cost accounting ledger to compare actual data against the budget. The system keeps history for every import within the cost accounting ledger. A cost accounting administrator uses the Cost accounting ledger administration workspace to import data.

Data is reported against cost elements. Main accounts are the only cost element that Finance supports. Cost element dimensions play a role in data presentation and application of policies. You can create multiple cost element dimensions by limiting the range of main accounts that are allowed for each dimension. Use the Dimension hierarchies menu item to define hierarchies of values for each cost element. You can build as many hierarchies as you need.

Financial dimensions are set up as cost objects in cost accounting. Cost objects play an integral role in policy application and view of the data. Go to the Cost accounting module and select the Dimension group to set up dimensions. You can use the Cost object dimensions menu item to define cost objects and the Dimension hierarchies menu item to define hierarchies of values for each cost object.

You can define rules to modify the data from what is posted in the ledger. To do so, go to the Cost accounting module and select the Policies group to set up the rules. You can choose to perform allocations within Cost accounting and not within the General ledger. Cost accounting has its own ledger for reporting.

You can set up the system to limit the data that each user can view. Individual users can review their part of the data by using the Cost control workspace. You can export data to Microsoft Excel to perform detailed analyses. You can analyze data by using Microsoft Power BI and an entity from the entity store.

Cost accounting integration with other modules

Cost accounting works with two types of data: general ledger data and budget data. As such, the General ledger module and Budget module are involved with Cost accounting.

Financial data includes data from other modules within Dynamics 365. Customers, vendors, projects, products, item groups, fixed assets, and production orders are possible financial dimensions.