MB-920 Describe Dynamics 365 Finance Practice Question
A manufacturing company uses Dynamics 365 Finance to manage its inventory. The company wants to ensure that the cost of raw materials is updated automatically when purchase orders are invoiced. Which costing method should the company use?
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Moving average
Standard costing updates costs based on predetermined standards, not automatically from purchase invoices. Weighted average and moving average can update on invoice posting. FIFO tracks actual cost layers. Moving average is commonly used for real-time cost updates.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✓
Moving average
Why this is correct
Moving average updates the cost automatically when a purchase invoice is posted.
- ✗
FIFO
Why it's wrong here
FIFO tracks actual cost layers but does not automatically update a single average cost.
- ✗
Standard costing
Why it's wrong here
Standard costing uses predetermined costs and does not automatically update from invoices.
- ✗
Weighted average
Why it's wrong here
Weighted average updates periodically, not necessarily automatically on invoice.
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