MB-920 Describe Dynamics 365 Supply Chain Management Practice Question
A small business uses Dynamics 365 Supply Chain Management to manage inventory. They currently sell products from a single warehouse. The owner wants to start tracking the cost of goods sold (COGS) for each product using the standard costing method. You need to set up the system to calculate COGS correctly. You have the following options: A. Enable standard costing in the Inventory model group for each product and run the Inventory close process periodically. B. Use the FIFO costing method and run the Inventory recalculation. C. Use the Moving average costing method and rely on automatic posting to the general ledger. D. Configure the Product master to use the Purchase price as the cost price and post directly to COGS. Which option should you choose?
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
✓
Enable standard costing in the Inventory model group for each product and run the Inventory close process periodically.
Standard costing requires setting the inventory model group to Standard cost and running the Inventory close process periodically to calculate variances and determine the actual COGS. Option A is incorrect because FIFO is a different costing method (first in, first out) and does not use standard costing. Option B is incorrect because using purchase price directly does not reflect standard costing methodology; standard costing uses predetermined costs. Option C is incorrect because moving average is a different costing method that calculates a weighted average cost after each receipt.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Use the FIFO costing method and run the Inventory recalculation.
Why it's wrong here
Enable standard costing in the Inventory model group for each product and run the Inventory close process periodically. This sets up standard costing which calculates COGS based on predetermined standard costs and then adjusts for variances after inventory close.
- ✗
Configure the Product master to use the Purchase price as the cost price and post directly to COGS.
Why it's wrong here
FIFO (First In, First Out) is a costing method that assumes the oldest inventory items are sold first. It does not use standard costing, so it will not meet the requirement to use standard costing.
- ✗
Use the Moving average costing method and rely on automatic posting to the general ledger.
Why it's wrong here
Moving average costing calculates a weighted average cost after each receipt. It does not use predetermined standard costs and is not compatible with standard costing methodology.
- ✓
Enable standard costing in the Inventory model group for each product and run the Inventory close process periodically.
Why this is correct
Using the purchase price directly does not reflect standard costing, which requires predetermined standard costs and variance calculations. This method would not produce accurate standard costing COGS.
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Same concept, more angles
1 more way this is tested on MB-920
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Variation 1. A company needs to calculate the cost of manufactured products including direct materials, labor, and overhead. Which costing methodology in Dynamics 365 Supply Chain Management should they use?
easy- A.Weighted average
- ✓ B.Standard costing
- C.FIFO
- D.Moving average
Why B: Standard costing is the correct methodology because it allows the company to define predetermined costs for direct materials, labor, and overhead, and then calculate variances against actual costs. In Dynamics 365 Supply Chain Management, standard costing is specifically designed for manufacturing scenarios where you need to value inventory and cost of goods sold based on expected costs, with variance tracking for deviations.
JA
Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
This MB-920 practice question is part of Courseiva's free Microsoft certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the MB-920 exam.