Groups vs Assemblies in QuickBooks
QuickBooks provides two item “types” that can have a list of component items – an Inventory Assembly and a Group. How do they differ, and when is it best to use one instead of the other? Today I’ll list the features of each and how you can use them.
Inventory Assembly Item
If you are a manufacturer you understand the basic concept of an inventory assembly item. This is the item that you are manufacturing. You pull some parts off the shelf, assemble or process them, and end up with a new part. Fairly straight forward. Let me list a few properties of an inventory assembly item in QuickBooks:
- Inventory Assembly items contain a bill of materials (BOM), which is a list of the component items that you use to create it.
- The BOM can contain other inventory assembly items, inventory parts, non-inventory parts, service and other charge items. You cannot include a group item.
- You can have up to 100 component parts in the BOM with Premier, and up to 500 component parts with Enterprise.
- QuickBooks Pro does not support this item.
- When you sell an inventory assembly the sale decreases your quantity on hand of the inventory assembly itself, but has no affect on the component parts of the inventory assembly.
- When you add an inventory assembly to an invoice (or estimate, sales order, etc.) QuickBooks will only list the inventory assembly item itself, it will not show the component parts.
- You cannot change the composition of the inventory assembly item at the time you sell (or build) it. You can only change it by editing the BOM in the edit item window.
- There is a special transaction called a “Build” that will consume the component parts (reduce the quantity on hand) and increase the quantity on hand of the inventory assembly. I discuss this in my starting with the basics post.
Group Item
On the surface, a Group item seems very similar. There are significant differences, however. I’ll list properties of a group item in the same order as I did for the inventory assembly item:
- Group items contain a list of component parts. It is not called a bill of materials but it is very similar.
- The component list can contain more item types – all the ones available to an inventory assembly item plus subtotal, discount and sales tax items.
- You can only have 20 component items in a group item.
- Group items are available in Pro, Premier and Enterprise.
- When you sell a group item the sale decreases your quantity on hand of the component items at that time. The group item doesn’t have a quantity of its own, so there is no effect on the group item itself.
- When you add a group item to an invoice (etc.) QuickBooks will list each of the component items on the screen. You have an option to show all of the components on the printed version of the form, or just show the group item itself.
- You can change the composition of the group item at the time you sell it. Once you add it to the invoice you can add or delete component lines, change quantities, and so forth. This does not affect the list of components as they are shown in the edit item window.
- There is no special transaction for a group item – you don’t “build” it. There isn’t a quantity on hand for the group item itself.
Understanding the Differences
It’s important to understand the differences between them because they take different processes to produce, and they show up in different ways in your reports.
An inventory assembly item is a real part – you build some and put them on the shelf, then you sell them or use them as a subassembly in another inventory assembly item. You will see the inventory assembly show up in your sales reports, but you will not see the component items show up as sales.
A group item is really just a shortcut, not a real part. You don’t have a balance on hand, you don’t see it in sales reports. It doesn’t exist, it is just a convenience to you to move a number of different parts through the sales process. You’ll never see the group item in your sales reports – you will see the component items showing up there.
In the traditional QuickBooks view, the inventory assembly item is what a manufacturer is working with. A group item is usually used more by distributors that are putting together standard kits or boxes at the time you are shipping.
However, group items can be used in some interesting ways to resolve certain kinds of problems for many manufacturers – and I’ll go into that in more detail in another article.
Category: Manufacturing and Inventory, Working with QuickBooks
About the Author (Author Profile)
Charlie Russell is the founder of CCRSoftware. He's been involved with the small business software industry since the mid 70's, and remembers releasing his first commercial accounting software product when you had a one-floppy disk drive system, loading the program from one floppy and then replacing that with the other floppy to hold the data. He has a special interest in inventory and manufacturing software for small businesses. Charlie is a Certified Advanced QuickBooks ProAdvisor with additional certifications for QuickBooks Online and QuickBooks Enterprise. He also is a Xero Certified Partner. Visit his CCRSoftware web site for information about his QuickBooks add-on products. Charlie can be reached at charlie.russell@sleeter.com He is also the author of the California Wildflower Hikes blog and a regular blog contributor to the Intuit Inner Circle. Connect with Charlie at GoogleSubscribe
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Good article. Good job on the writing, and covering important details.
Thanks, Madeline!
I agree- This was very helpful. Thanks Charlie.
Hi Charlie,
Funny I stumbled upon YOUR article while trying to figure out how to tackle a problem. I buy a Merchandiser from a vendor. It contains about 35 items I sell individually. But we get buy it as a kit from them and we get it at a better price. So I tried to use a group but it forces me to make three groups to accommodate them all. Plus I am not sure how I can adjust my cost with this method…
I like the shortcut of a group but they are too small and price is not editable it seems. Any suggestions?
Amy! My favorite customer!
I’m not clear as to what exactly you are doing here – why you need to make three groups, for instance. Or what you want to do for your COST? If you can give me some more details perhaps I can help…
We received a parts kit from a vendor that includes 78 different items. We plan to sell the items in the kit separately. How can we record the kit in QuickBooks so the items are updated with available quantities. When I received it as an inventory assembly item, the quantities of the individual items still showed 0.
Marlene, there isn’t a “disassembly” feature in QuickBooks. The only way in QB itself would be to use “group” items instead of “assembly” items. However, that has a limit of 20 components per group, so that is an issue. And, group items have many more differences than assembly items, and that might not work in your situation. Otherwise, you have to receive the items separately or do a lot of inventory adjustments.
We recently sold 2 assembly items to a customer. It turns out he ordered the wrong size so we now have them back here to be credited to his account. We are a little confused about the best way to proceed.
We have put the individual components back on the shelf so we have increased our physical inventory for each item by 2. Now if we credit the assemblies we will show 2 of them in inventory, but we don’t really have the 2 assemblies anymore, we have the components.
Do we now delete the assembly build to even things up? Does that introduce other complications that need to be dealt with?
Bill, how did you add the components back to the inventory in QuickBooks? There are several ways to do that, and how you deal with the assemblies does depend on what steps you took already.
QB doesn’t have a disassembly feature, as I’ve mentioned. If this was a return of a sale, you would normally issue a credit memo against those items (but not necessarily – you could have handled that several ways). Then you can do an inventory adjustment to an “inventory variation” account, decreasing the quantity of the assembly and increasing the quantity of the components. However, that again depends on a number of factors, such as what kinds of items you have in the BOM, how long ago the original transactions occurred, and more.
It is hard to give a specific answer without the details, as there are many variables. You may want to work with a knowledgeable consultant on how to do this.
I sell inventory assemblies (lamps), I buy inventory parts (sockets, switches etc). As needed I put them together to build a lamp. Some sockets apply to multiple lamps.
I am having difficulty of tracking what I can sell ex. a customer calls asking about a product and a lead time. I would like to show my potential capability to build (lamps) Inventory Assemblies without actually building them yet.
I can issue an Inventory Reorder Report, which shows “On Hand” (usually 0) and among other things “Available” (also usually 0 as I haven’t built any Inv. Assm. in QB yet).
I am not using sales orders. I am afraid this will not resolve my problems, but further complicate my QB.
What solutions exist? I am thinking of creating a workaround via groups:
Each lamp SKU has an inventory assembly, that I build on order, that I sell. Each lamp SKU also has a group that matches the inventory assembly BOM, but the group is only used for purposes of evaluating potential capability to build lamps.
Thanks for all your past comments to the community Charlie! Very impressive.
There is no concept of “lead time” in QuickBooks. You have to go to a third party add-on for that, and it would have to be one of the more expensive ones.
Knowing “how many can I build” is complicated, too, if you have multiple assemblies. You can look at one assembly and see if you have parts to build it, but if you have more than one assembly that won’t work unless they NEVER share any common parts.
I’m not sure that I see how group items will help?
Take a look at this article: http://www.sleeter.com/blog/2011/02/quickbooks-manufacturing-forecasts-component-demand/
Also take a look at the requirements reporting capabilities of CCRQBOM (http://www.ccrsoftware.com/CCRQBOM/CCRQBOM.htm).
Hi Charlie,
A client has a product that she sells individually for ie: $6. She also sells a package of 5 of these items for $25. Group sounds more appropriate for her than assembly. Can she “group” these items and charge a lesser price than the single items multiplied? And her on-hand count will reduce by 5 each time she sells a package?
Kathy, normally I would be thinking of using the unit of measure feature if I’m selling one item by “each” as well a a “package”. Then you have only one item in the item list. However, that doesn’t let you create a reduced per-unit price for the package.
With a Group item, you now have two entries in the item list. If there are a lot of items like this, it clogs up the item list. And you have two descriptions to maintain (which might not be an issue). However, for price setting, this can work. You can add a discount item to the group, to reduce the price. So if the item is $6.00 for a unit, you can create a group that has 5 of that item (which is $30) and then a discount item for $5, to reduce the price to $25.
And when you sell that group item, it reduces the quantity of the single unit by a quantity of 5.
Charlie,
Thanks for the article. It helped because I was looking to see why I didn’t have the assembly feature and it is because I am using the Pro version. So – I will have to use groups (if I can.)
Here is my situation. My husband buys old pinball and arcade machines, restores them and then (hopefully) sells them. I put the original item in inventory when he gets it. Then, I have an expense for “parts” for the little stuff that may not be specific to one game (cleaning supplies, paint, etc.) Occasionally, I need to get a new part (new back-glass for instance) that is specific to that machine. When I order the new back-glass, how do I add it as a “cost” to that specific pinball machine so that when we sell the machine, it will be reflected in the COGS?
Julie, I’d need to know more about your business and how you treat inventory before I could give you a comprehensive answer. I’m wondering if you shouldn’t just be treating some of these things as non-inventory parts and expense them up front, rather than worrying about COGS. However, you could use group items to include the back glass in the sale of the machine, if you wish. You might want to take a look at this other article, which may be appropriate for you: http://www.sleeter.com/blog/2011/02/groups-for-custom-manufacturers/
Charlie,
Thanks for the link. Since I only have the Pro edition, I cannot use assembly items.
As for how I treat inventory, I put it in as an item when it is purchased. Because each item is unique (depending on condition, etc.) even two supposed identical items would have their own item record. For example, two different items labeled: 1952 All Star Baseball and 1952 All Star Baseball (2). One has a cost of $1500 and the other has a cost of $2000. If the $1500 one needs more restoration before it can be resold, I would like to add the cost of that restoration into its actual cost. I tried making a COGS expense for it, but that doesn’t work, because it shows up as an expense for this year – even though it might not be sold (and hopefully recouped) for a year or more. We only buy and sell a few items every year, and some items may not get sold for several years, so I don’t want the expense for restoring them to be realized until the item is actually sold.
Thanks,
Julie
Julie, even though you don’t have assembly items, the idea of using the group item for “custom” work has some value.
In any case, given that you have a low volume, you can work the cost of parts into the main product by using inventory value adjustments. You buy a machine for $100 and set up an inventory item, that gives it the value of $100. You buy a flipper for $5, also an inventory part. Then you do a “value/quantity” adjustment, decreasing the value of the flipper by $5.00 and quantity 1, increasing the value of the machine item by $5 but not changing the quantity. That moves the cost of the part into the cost of the machine, and your COGS will be accurate when you sell the machine.
Charlie,
Thank you so much. I think that will work!
Julie
Charlie,
We are trying to use the Group feature to produce a “sub-total” for 5 different categories on our invoice. Within those categories are approximately 3-5 different types of service items, with none of the sevice items duplicated across categories. Is this even possible? If not, is there something you suggest to produce this type of invoice? Example below
Category 1……………..sub total $1000
- service item 1………..cost $500
- service item 2………..cost $300
- service item 3………..cost $200
Category 2……………..sub total $2500
- service item 4………..cost $1200
- service item 5………..cost $600
- service item 6………..cost $700
………………………Total Cost $3500
Sure, Kasey, you can do this. Try it out, it should work fine.
Using group, if you want to track package sales, is there a way or is it component only?
Vici, Group items won’t show in a sales report. They are just a shortcut, not a “real” item.
The way to deal with this is to create a dummy “service” or “non-inventory” part (not an inventory part or assembly) that has a zero price/cost, and include that. It will be sold (at no cost or quantity) as a part of the group, and you can track that as far as number sold.