QuickBooks Manufacturing Tutorial
QuickBooks has a “Manufacturing & Wholesale” edition, but there is a definite lack of documentation on how to actually use QuickBooks in a manufacturing business. This posting is the first in a series that will give you some guidelines on how to best use QuickBooks in a manufacturing environment. I’ll start off with some basics, and work our way up through some more complicated scenarios.
If you click on the Manufacturing item in the menu bar you will find a list of manufacturing tutorial articles.
There are many ways to manage a manufacturing firm, there are many very different kinds of processes that can be called “manufacturing”. Some of my suggestions won’t fit every business – so feel free to tell me if you have a better approach for YOUR business!
Starting with the Basics
I have a mixture of subscribers to this blog, from brand new users to seasoned veterans. So I’ll start with some very basic points for the uninitiated.
Note that I’ll be discussing features in the US Premier and Enterprise editions. Some screen shots may vary from what you see, as there are variations from one year of QuickBooks to the next.
First off – if you are using Simple Start or Pro then much of this won’t apply to you. The inventory assembly item that we will be using is only found in Premier and Enterprise. In addition, Enterprise has features that relate to manufacturing that aren’t found in Premier. I’ll try to point that out when possible.
The basic process to get started with assembling items is:
- Create the inventory parts that are components of your assembly.
- Create the inventory assembly and assign it the parts you use.
- “Build” or assemble your inventory assemblies.
Create the Inventory Parts
The first step you need to take is to enable inventory management in your company file. This is not set up by default – and it can be confusing to new users because you will see the item list even if it is not enabled.
Select Edit from the main menu, then Preferences. Select the Items & Inventory option, then the Company Preferences tab. Put a check mark in the box by Inventory and purchase orders are active.
Now you can add your inventory parts to the item list. While in the item list press cntrl-N to add a new item.
There are several different kinds of items that you can add – we’ll work just with inventory part items now (discussions on how to use other item types will be in future articles).
For each material item that you use as a component in your assembly, add an inventory part. You can also create non-inventory parts for items that you don’t keep track of by count. Please note that I do not recommend that you enter an on hand value at the bottom of the screen at this time, unless you are starting up QuickBooks for the first time and you have taken a physical count of your inventory.
Create the Inventory Assemblies
After you have created all of your inventory part items, you can add an inventory assembly item for each manufactured item. The primary difference from an inventory part is that you can assign a component list, a bill of materials (or “BOM”). This is a list of all of the parts
In this example, to make one “WHAS” wheel assembly we need two SC-12 screws and one RORO-4 roller.
Build the Assemblies
Now that we have defined the parts and assemblies, we can build the assembly. From the Activities button at the bottom of the item list, click Build Assemblies. In the Build Assemblies dialog you will select the assembly to build and enter the number of this assembly that you want to build.
When you click either of the build buttons, the program will save this build (if possible, as discussed below). Two things happen now:
- QuickBooks will remove the quantity needed amount of each of the component items (I refer to this as consuming the items in a build).
- QuickBooks will increase the quantity of the inventory assembly item by the quantity to build.
Essentially we are moving the cost of the inventory part assets into the inventory assembly asset.
A few comments on what happens here:
- Note the maximum number you can build… value. QuickBooks won’t let you build an assembly if you don’t have enough parts on hand to build it, This value shows you how many you can build with the parts that you have.
- If you enter a quantity to build that is higher than that maximum number, QuickBooks will mark the “build” as Pending. This means that it hasn’t been built, it is waiting to be built. There are reports that list the pending builds.
- When you enter the quantity to build much of the information in this dialog will not be updated until you move the cursor to another field, such as the date or memo. This can be confusing at first. When you move the cursor off that field the qty needed is updated, and the pending stamp could be displayed.
The Date field is very important. This is the date that the build transaction takes place. The quantity on hand for the component parts is based on your inventory status as of this date. Sometimes people get frustrated – they look at an inventory report and it says you have enough, but this dialog says you don’t! The issue is usually the dates – if the report is dated after a PO is received, but your build is dated earlier, you might not have had those parts on this date. Adjust the date in either your report, or the build.
As you might expect, the same issue relates to the assemblies you build – they are only available on or after the build date, not before.
This has been a quick overview of how to work with an assembly item and to issue a build. We’ll go into more detail about how to structure the BOM, and use other item types, in the future.
To learn more about using QuickBooks in your manufacturing company, click on the Manufacturing tab in the menu bar.
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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Hi Charlie
I am using QB enterprise 12 with Advanced inventory.
This article is great help and opened my eyes to a lot of things( the importance of the dates). We assemble products from items bought at bulk. We give out products to distributors like in consignnments and treat them as sites. Those distributors refill every week , and bring in invoices of sold goods during the week at that time, my question is how to have their inventory controlled in QB if we did not invoice yet their sales.
I’m not clear about what you are asking, Moheb. You’ve used sites to represent your distributors. You do (I assume) transfers to move product to the distributor site. When they sell the item, you enter an invoice to remove it from the site. What are you missing? Or better yet, what am I missing?
Charlie, Sorry for the confusion. I guess my goal is to generate truck inventory report ( site) , but at this point of refill I have not entered the weekly sales yet to generate that report. Thanks for your help , I think it is a timing situation which I have to work on manually for the timebeing.
Have a great weekend.
Hi Charlie,
Thank you for posting this, as you’ve indicated, I’ve found very little useful information on how to set up inventory and make the system work with respect to the QB Manufacturing Software. If you ever feel really inspired, I’m pretty sure there would be a high demand for a ‘dummies series’on this subject.
-AGS
Thank you, Andrew. As you look through this blog you’ll see that there are quite a few articles about this that I’ve written. In addition, there will be an “inventory” chapter in the 2012 version of The Sleeter Group’s “Consultants Reference Guide”, out later this year, that I’ve written.
I want to ask your advice about how to handle shrinkage in the manufacturing process. My company purchases raw material and has it gound to a power. When that is done there is a 12% shrinkage. I wanted to set up an inventory aprt for the raw material and the an assembly item for the power.
This assembly item (power) is then used in further production of capsules (another assembly item.
My question to you is how can I reflect the 12% shrinkage when going from Raw to assembly power?
Robert, several ways of dealing with this depending on what you want to accomplish and what QuickBooks edition/version you are using.
One way is to make a quantity/value adjustment to the assembly after the build, to reduce the quantity of the assembly that you have without reducing the value.
Another way is to build the shrinkage into the BOM, but that depends on how you are handling your process. If you take one lb of material and generate 0.88 of powder, you can instead set it up so that you generate 1 lb of powder out of 1.14 of raw material. However, that might not be what you want.
Charlie –
I have a client where they purchase raw material in pounds, add labor and additional expenses, and end up with finished goods. They use Enterprise 12 with advanced inventory. (They purchase pounds of scrap batteries, separate out the useable batteries, and apply these to their sell-able inventory)
My question is this, how do I process the transfer from the scrap pounds (which goes into QB as QTY) to adding the individual items into the inventory for sale correctly?
Any help would be greatly appreciated. Thanks.
Ferrukh: You could do an inventory adjustment, reducing the quantity of the scrap battery item and increasing the quantity of the useable battery. You would use a “clearing” account for the adjustment account. The tough part would be determining how the cost flows, and I can’t really give you details on that without knowing a lot more.
Charlie, thanks for the great tutorial.
I am using Quickbooks UK version and I have access to assemblies.
My problem is QuickBooks does not seem to have support for unmanufacturing assemblies.
What I do is I buy an assembly in from my supplier ( in this case a kit-item, containing many difference electronic capacitors ). I sell this item – but I also sell the various individual items – which each are a separate product.
QuickBooks doesn’t seem to support the unmanufacture of the sub-assembly into the different components (i.e. I tried entering -1 in the quantity to manufacture, but it won’t let me). Are you aware of alternate solutions / suggestions? I wonder why Quickbooks chose not to include this feature.
Many thanks
Piet
You are right, an “un-assembly” option is not available. The best you can do is to use inventory adjustments to decrease the quantity of the assembly and increase the quantity of the component parts.
Thanks Dave – figured that much – will try and use the SDK to automate this. Regards.
we are using quick books enterprise and we have numerous assemblies which we would like to export the BOM into excel with all the pricing for each item to give us a TOTAL price for an item. how can i do this?
Thanks
Spencer, you can export a BOM to Excel using the CCRQBOM product (http://www.ccrsoftware.com/CCRQBOM/CCRQBOM.htm), which includes an Excel export feature in the report tool, or you can look at the Transaction Pro Exporter (www.baystateconsulting.com, which I reviewed at http://qbblog.ccrsoftware.info/2009/06/exporting-quickbooks-transactions-with-transaction-pro-exporter/). Both products can do what you want, but they have very different approaches to the issue.
We use Enterprise Manufacturing/Wholesale 12 but I’m having difficulty automating some of the processes in QB that we are currently doing manually.
We are a manufacturer that brings in bulk items, puts them in inventory, and then currently we’re using build assemblies to take those out of inventory and into COGS.
The problem that we’re having is that currently the sales/work order process is completely manual. The purchasing department has no way to look in QB and determine what items we will need for future builds. As I understand it, we could create the sales/work orders in QB to generate a Pick List. However, my problem with that is being able to keep the inventory up to date as the build goes through the manufacturing process (upwards of 1-2 weeks). I have read in the QB help that we could do Progress Invoicing. But that brings us to another issue. We can’t have multiple invoices for the same build. The end result has to be only one invoice to the customer.
So what is the best way to combine all these issues. We need to be able to put in the work orders in QB, track the items needed for each order, process inventory in phases (out of inventory and into COGS), and then one invoice to the customer at the end.
Any help would be appreciated. Thank you!
Jane, I’m not sure I understand which particular problem you are concerned with.
Items needed for future builds – invoices/pick lists/progress invoicing won’t touch that. They only look at the assembly item that you would have on an order, NOT the components of that assembly.
In this case, one thing to consider would be creating a “pending build” for the assembly. Then the components of the assembly will show in the Inventory Stock Status report as allocated to a future build (see my article on “available inventory” at http://www.sleeter.com/blog/2012/03/quickbooks-available-inventory/ for more about this).
Another option is to use an add-on product. There are several manufacturing oriented products like MiSys and ACCTivate (which I’ll be reviewing later this summer). These are large applications that will provide you with many forward-looking planning features, but they involve considerable effort to implement. Another add-on that would help, which is lower cost and easier to implement (but doesn’t do as much as the other two products) is CCRQBOM (http://www.ccrsoftware.com/CCRQBOM/CCRQBOM.htm). Note that this is a product that my own software company produces, it is not associated with The Sleeter Group.
If you are managing a multiple level complicated assembly that takes time to complete, you also can do your build in stages. Take a look at this article for some ideas on that: http://www.sleeter.com/blog/2011/02/manufacturing-wip-in-quickbooks/
Hi,
I am deciding between buying Quickbooks Premiere UK 2010 version on Amazon vs the 2012 version. is there really much of a difference?
Thanks,
Liza
Liza, if you are comparing the US and the UK versions, there are big differences. Taxes are different, payroll is different, and there are many add-ons and apps for the US version that won’t work with the UK version. I’d get the version that fits the country that you are working in.
Hi Charlie,
We have installed and working on QB Premier 2009. Its working fine except for some technical difficulty. Hope you can resolve the issue.
We are a Manufacturing concern, producing Bakeries’ items for our franchises. While working and creating for item assemblies we face the following :
1. If a product name is “A” with UOM is “kg” and contains 07 inventory items. 2 or 3 items are main while rest 4 to 5 items are used in very little quantity. For example 0.00133 (corn Flour) require to built one unit of “A” . which is quite difficult to calculate. While 40 grams for 30 kg production is little easier and calculate more accurately in reports. Is there any possibility that we can assign minimum production batch quantity and assign the same respective quantities while calculating BOM.
2. QB takes the cost in an assembly for a single Inventory items from the last purchase or the defined cost. While we need the average cost of unit appearing last against the item in a BOM.
Tahir: On the first issue, there aren’t great answers for QuickBooks. When you have wildly differing units of measure, and you have a large batch item that uses a very small trace item, QuickBooks doesn’t work well. It isn’t designed to accommodate process manufacturing like this, and rounding errors can be a problem. If the small item is not an expensive item, if it isn’t critical to track, sometimes we look at making it a non-inventory part so that you don’t have to track the quantity involved. That changes the dynamics of things quite a bit so you have to think about that carefully. Some businesses just ignore the trace items in a QB build. Or, you can change how you are defining the assembly itself – instead of making a BOM for a large batch, make it for a smaller batch, and always issue a build for multiple items to make the large batch. These are all workarounds, but they have significant impact on how things work in your financial system and you have to really think about how these would change things. Unfortunately, with QB, it is a tough problem to deal with.
For the second, note that when you build an assembly the actual cost of the built item DOES incorporate the average cost of the component parts. The “total bill of material cost” that is listed in the Edit Item window is based on the “cost” (not average cost) of the components, but that is just a figure used for planning purposes, it isn’t what is used in financial calculations. See my articles on cost and total bill of material costs (http://www.sleeter.com/blog/2011/02/understanding-quickbooks-inventory-cost/ and http://www.sleeter.com/blog/2011/02/understanding-quickbooks-total-bill-of-materials-cost/) I also write about this in the Inventory chapter of the 2012 Consultant’s Reference Guide (http://bit.ly/I7txfd)
Hi Charlie
Good Morning ! Sorry to bother you again for QB help and thanks for your last tips.
We are in process to define the “Class” with QB for our departments and need your help yet again.
Firstly please allow me to write some details to describe our company scenario.
Company Name : M/s ABC :
Class : ABC
Departments : 1, 2, 3, 4
Sub class or Class : 1
Sub class or Class : 2
Sub class or Class : 3
Sub class or Class : 4
Practically we take all inventory directly in Main Store Operated under ABC and then transfer the routine requirement to Various departments, Many of the items are same for every department for example Inventory Item # XYZ directly purchase and subsequently trf to 3 department as per their requirement.
1. We don’t find any WINDOW / form in QB which allow us to trf the inventory and products from / to Main store to / from departments. (Class to Class or Class to Sub-Class)
2. The defining Items Assembly QB doesn’t give us option to define Class. For example Inventory Item # RST purchase by main Store (Class # ABC) in 100 kg , transfer to Class 1 say 75 kg . RST consumed 40 kg while Producing one Item Assembly. Now reality says That we should 25 kg Inventory remaining at main Store, 35 kg at Class 1 ( 75 minus 40 kg).
3. Currently all the products from each department sales to franchises daily against one invoice consist of all four department products, Can we continue the same practice of one invoice for against all classes after assigning classes .
Tahir: If I recall correctly, you are using Premier?
When you say “Class” are you referring to the “Class” feature in QuickBooks, that you can specify in purchase and sale transactions? I just want to be sure.
“Class”, as in the feature in QuickBooks, only applies to transactions that affect the income statement. It doesn’t apply to the balance sheet. So you won’t see Class affecting the inventory asset account, if that is what you are looking at. Since a “build assembly” transaction typically only affects inventory asset accounts (although not necessarily, depending on your BOM) you aren’t going to see “Class” as a field in that transaction.
Thanks Charlie
But what about Inventory status at Various locations, how can we track them separatly? Each Location may have same item
Cheers
Tahir
Tahir, unless you create totally separate items for each location, you can’t easily track inventory status by location in QuickBooks Premier. If you have item “A” then you need an item “A” for each location. There are several ways of doing that, but it can be complicated if you have a lot of items. QuickBooks Premier just isn’t set up to handle that.
This would be handled by QuickBooks Enterprise with the Advanced Inventory option.
Hi — I need some guidance in setting up my assembly items — my raw material produces a final product and provides me by products to produce two other finished products. have just not been able to set this up properly in QB — any ideas
Gordon, if the manufacturing process creates two finished items, to separate items, QuickBooks won’t handle that. You have to create the one assembly and then do an inventory adjustment to create the second item. OR, you work with multiple level assemblies, where your first step is to make an intermediate product, and then you have the two final products each consuming a part of that intermediate.
Thanks Russell — one quick question. With the multiple level assembly — Lets assume that you have an input A that produces two products B and C — B is a finished product and could be sold as is and C could be used to produce two other product D and E, which could also be sold as Is — Would this be considered multiple level assembly? Thus revenue will be genrated from the sale of Produces B D and E from the listed examble. Obviously this will have an impact on your Cost of production.
Any guidance how to set this up in QB will be appreciated.
Gordon, funny you should ask that one. If you are talking about “byproducts”, where you create two (or more) useable items out of one manufacturing process – I’m just about to publish an article on that. If all goes well, it should be in the blog on May 23 2012.
Thanks Russell — Will look out for this. Also, do you know of a specialist on QB manufacturing and wholesale? I need to book a 40 hour week for consultation services.
Thanks again.
Gordon, please feel free to contact me directly at the email address in my “profile” and I can give you some names of people. Also, you may want to try the “Find a Sleeter-Certified Consultant” link in the upper right column of this page to search for someone in your area.
Good-day Mr Russell
I wonder if you can help me out…
I’m using the Premier version, just started setting up the manufacturing of a small yet seemingly complex business. Many, many recipies and products 150+ for sure! The raw materials were started for me and I have taken over.
my first question: raw materials are a ‘stock part’, okay? So, I built my first product, drawing two items from raw materials, which is a ‘stock assembly’. Does that sound right?
Keep in mind there are many products with some crazy ‘pre-finished-product’ requirements. For example, one I was working on last night:
Bath Salts:
We have 7 different colours (plus an assorted pack of 6 colours), packed into 50g, 100g, 150g & 350g. The 7 colours are also sold in 1KG packs (no assorted obviously).
My concern is that it seems I would need 46 builds!!
Hope I came across clear enough…
James, if you stock each of those items as separate items, that you sell and want to track, then yes you have to build each type more or less. It does depend on what exactly you are trying to track and how you are selling the items. Also, if you are actually stocking the items.
So if you go out into the warehouse and you can see separate packages for each color, in each size, and you list them as separate items in an invoice when you sell them, then you need an item for each one. You might be able to get around this on the sizes if you use the multiple unit of measure feature, although that might not be what you want.
I would suggest that you sit down with a qualified advisor who can go through this with you. You can use the “find a consultant” link in the right column of this page.
I’m having an issue with getting the correct average cost of a few iventory parts for building assemblies. Most parts come with a freight cost included, but a few have freight charged by a 3rd party carrier.
Currently, I receive the product in on the date received, with a cost of whatever the vendor’s invoice states. Later, an invoice from the carrier comes, and I enter that bill into a clearing account: Inbound Freight Cost (expense), and do an inventory adjust for Total Value only, back to the date of receipt of product, to increase the cost of the product so that COGS is accurately reflected.
My issue is this: In the inventory valuation detail, a couple parts are having incorrect average costs:
Bill for Part – New Avg Cost $0.04
Build Assembly Avg Cost $0.04
Build Assembly Avg Cost $0.04
Build Assembly Avg Cost $0.04
Inv Adj In Frt – New Avg Cost $0.06
The final avg cost of $0.06 is what I need to be after the adjustment, but before the Assembly builds, because it’s otherwise showing a greater gross margin ($180) on those particular builds. Maybe this will all wash out in the end, because the avg cost is higher for future builds, or maybe these small differences aren’t even material. But I’m not sure how many other instances this is, and a few of them could add up to $1,000 for a couple ingredients.
Thanks for the help!
Mike, this is a bit hard to follow, so my apologies if I don’t quite answer things for you. Are you saying that you have a part that you use in an assembly, and that you are adjusting the total value of that purchased part after the fact, and after it was used in the build? You didn’t include dates in your description, so I can’t really say what is going on.
If you have a part at a particular cost, and you use it in a build, that cost goes into the build. If you adjust the cost of that part with an adjustment date prior to that of the build, then that new cost will be used as the part cost for the build. So the cost of the assembly would go up when you adjust the cost of the part up – if the dates all work out.
Sorry, yes, the adjustment is being done after the ingredient is received and the product built. For example, on 5/1, we get molasses and I receive it into inventory with a bill and a cost. I then used that molasses in an assembly and build that assembly that same day, 5/1. Then, on 5/15, the trucking company sends us their bill for shipping us the molasses.
I enter the bill into our Inbound Freight clearing account, and then do a value-only adjustment to the molasses back to 5/1 to increase the value of the molasses by the freight invoice to raise the item cost so that COGS is correctly shown. My issue is that, even though all the dates are entered to be effective that same day, my adjustment to increase the cost from the freight is going in after my builds, making them cheaper (basically at product cost only, no freight).
I see you said to enter it into the prior date, but I was hoping to get it all in the same month (since prior to 5/1 is 4/30) and the same dates. Maybe it’s not possible though and this is just another “smash head into wall” QuickBooks issue.
Thanks for the insights!
QuickBooks doesn’t make this easy, as you have found.
If you make the adjustment to the raw material back to the date of the item receipt, you may or may not get the result you want. Timing of things on the same day is tricky, and doesn’t always work (as you have noted). And, that transaction is going to create some odd things showing up, temporarily, in your financial statements.
If the entire shipment of molasses is used up in the build, I would consider looking at making the inventory value adjustment to the ASSEMBLY, rather than the molasses itself? That is something you should talk about with your financial advisor, I’m not sure how that would look in a financial audit. If the entire shipment isn’t used in the build then it gets really tricky. Note that I haven’t played with this, I’m just throwing out ideas from the top of my head.
The entire shipment doesn’t get used up in a day typically, it can takes weeks and multiple assembly builds. I think I’ll have to go with making the adjustment for the day before in the cases where it doesn’t come out right for all the activity on the same day (item bill, freight bill, and assemblies built). Thanks for you help and insights into this issue, it’s greatly appreciated!
Hi Charlie,
First off, thanks so much for posting articles touching on topics that are hard to find elsewhere. It is very much appreciated.
How does Quickbooks handle an assembly when all of the items are non-inventory items that are marked as “used in assemblies”? It seems that Quickbooks considers the assembly to be inventory only.
PJ, you are welcome!
You can have a wide variety of parts in the BOM for an assembly. The issues are how cost is allocated to the assembly when you do a build.
Components that are inventory parts or inventory assemblies will have their quantity reduced in a build, and their average cost is used.
Other items will have their “cost” used, since they don’t have an average cost. This cost is taken from the account that is associated with the item. If the “this item is used in assemblies” box is NOT checked, you have one “account” and that is where the cost is taken from. Same account that is used in a sales transaction. If you check that box you make this a “two sided” item, with two accounts. A build will pull the cost from the expense account, not the income account.
See my articles on this issue at:
http://www.sleeter.com/blog/2011/02/item-types-in-a-quickbooks-bill-of-materials/
http://www.sleeter.com/blog/2011/02/understanding-quickbooks-inventory-cost/
http://www.sleeter.com/blog/2011/02/understanding-quickbooks-total-bill-of-materials-cost/
Hi! Great article! We have Quickbooks Enterprise 2012 and we set up the parts and assemblies (BOM). We thought that by placing a PO or invoice, the inventory was going modified according (deducted if issuing an invoice to a customer for that inventory assembly, or added if I’m placing a PO for an inventory part). Based on your blog, it seems that after we set up the inventory part and the assemblies, I need to ‘Build an Assembly’? So basically, this is my actual inventory that both invoices and PO’s will be affecting? I just want to make sure I’m not missing a step, since the first time we tried setting up inventory tracking, we got all lost so we will try this again.
Also, we sell our products in finished goods (units), and we buy ingredients in lb, kg and gallon. Does QB have the ability to convert, or do I need to convert this when we place my PO’s?
Thank you so much for your help on this!!!
Desiree, the only operation that is going to use the bill of materials is a build transaction. If you buy the inventory parts, they are added to your inventory. If you sell the inventory assembly, that assembly is removed from your inventory. If that is all you do, you are going to be accumulating the parts, and going negative on the assemblies.
So if you are manufacturing something, you issue a PO, then you receive the items, then you build the assembly, then you sell the assembly.
As far as the unit of measure issue, not a problem. You can buy something in gallons (for example). The assembly BOM specifies how many gallons of that part are used to make one unit of the assembly. Then you can sell the assembly in eaches. For example.
Thank you so much for getting back to me so quickly! I now understand more about the process and why I was getting negatives in our inventory assemblies. I have just bought your book, so we will try again setting this up!! Again thank you and hopefully there are no more questions.
my base u/m is piece/pack. how can i use case/box on the inventory u/m?
Jessel, I would need a bit more info on this. Are you saying that for one particular item you use “piece” as the base unit, with “pack” being another measure (multiple “pieces”)? Or is piece/pack the actual single unit?
And what edition of QuickBooks do you have? Some editions limit the features you can use.
We are using QuickBooks 10.0 and we are trying to get our inventory correct. How do you set it up if you sell items by the case and individual and still keep the inventory correct? Is there a way to set up an automatic discount on certain items if a customer buys enough to get a case price?
Lauren, different “editions” support different features in relation to units of measure. If you have an edition that supports “multiple units of measure” (you will have to enable that in your “preferences”) then you can specify that an item has a “base” unit of measure (such as “each”) and then any number of higher units of measure, such as a case of 12. If you sell an “each” you sell one. If you sell a single “case of 12″ then you have sold 12. Pricing is more complicated. In this situation you have to either use a price level list, a discount item, or a discount item within a group. QuickBooks doesn’t manage price breaks for you.
Hi, we are using QuickBooks Premier – Manufacturing and Wholesale Edition 2012. I have an assembled product call “widget” that contains two inventory parts: “A” and “B”. How can I record the COGS as “COGS for A” and “COGS for B” instead of “COGS for widget”? Thank you!
Kathy, take a look at the article at http://www.sleeter.com/blog/2011/02/understanding-quickbooks-total-bill-of-materials-cost/
In a normal situation you don’t want COGS to be updated when you manufacture the item. You aren’t expensing it at that time, you aren’t selling it. You are just moving the asset value out of the component and into the assembly. COGS would normally be updated at the time you sell the assembly – and that is going to pull the cost from the overall assembly asset value.
I am currently using Premier Manufacturing and Wholesale 12 and am having a serious problem with my assembly average cost at the bottom of the item page. They are showing entirely too high cost. In the cost and the BOM, the cost are the same. So when you run reports, you get negative COGS. What could be wrong? Thank you!
Laurie, take a look at the article at http://www.sleeter.com/blog/2011/02/understanding-quickbooks-total-bill-of-materials-cost/
Do you have any items in your item list that have a negative on hand QUANTITY at any particular time? This can do some really odd things to inventory valuation, as QuickBooks is trying to compensate for something that, in a ways, should be impossible.
Hi Charlie
I would like to purchase QB Manufacturing & wholesale but I am not sure if it is the right product for me. I simply want to purchase individual items from factories and resell them to retailers, no assembly is needed. I will need to raise a PO to the factory who will then ship the items to the warehouse. I will then receive customer orders from the retailers (usually via EDI). It would be nice if those orders can be integrated within QB instead of manually inputting them as they could be thousands of order lines. After shipping to the customer, I expect the inventory to be reduced at the warehouse automatically. Can QB handle this scenario?
Thanks
Mohammed, QB Mfg & Wholesale would make sense (don’t worry about the “manufacturing” part of the name). You don’t want the Retail version, it has limitations that are annoying.
EDI integration isn’t a part of QuickBooks, you usually go to a third party tool for that. I’ve not worked with EDI and QuickBooks, but there are several good packages that you can look at. TrueCommerce is the one I hear about the most often.
However, when you talk about at the “warehouse”, it isn’t clear if you are trying to manage multiple locations. If so, that adds a complication.
Hi Charlie, I appreciate your prompt feedback. I have heard about a software called DiIntegrator but I will contact EDI companies to get further details.
As for the warehouse it will be one single location.
Do you know of any training that deals specifically with this QB wholesale version?
Thanks
Mohammed
Mohammed, there aren’t a lot of inventory-specific training sources out there OTHER than this blog, as well as the chapter on QuickBooks Inventory that I wrote in the 2012 edition of the QuickBOoks Consultant’s Reference Guide (see it at http://www.sleeter.com/products/crg?utm_source=Beyond&utm_medium=Widgett&utm_campaign=CRG).
Charlie:
Thanks for posting this. We use QuickBooks Pro 2012. We have created all of our inventory parts. Now we want to create the Inventory Assemblies. When I create a new item in the Items List I don’t see Inventory Assemblies as an option in the Type drop down menu. Do you know how I can add this?
Jeff, as I say in the article (although it might be a bit buried), this doesn’t apply to Pro. You don’t have the “inventory assembly item” type in Pro. You have to be using Premier or Enterprise to get that.
Thanks Charlie. I appreciate the expedient reply.
Thankbyoubfornthe great article. Can you explain how we would add sales tax to an invoice in qb premier 2012 manufacturing and wholesale edition? I don’t see sales tax item listed do I need to enable it?
David, you have to enable sales tax in your preferences. See my article on sales tax at http://www.sleeter.com/blog/2011/02/setting-up-sales-tax-in-quickbooks/
I saw that but was not at the machine to see if it was available ( we loaded retail edition initially and unit of measure was inaccessible) so ur saying sales tax will be accessible through preferences in manufacturing and wholesale edition…. Thank you!
hi charlie,
am presently planning to customise a manufacturing company for a friend of my on quickbooks premier 2007 and he plans to produce lolipop sweets and he needs you know, the various component parts (bill of material) like batch,sugar,colour and sticks,wrappers,cartons,tape and so on to form an assembly part.
my problem is you know the quanitity to produce just one cartoon of lolipop will require the lowest units of measurements of this component parts like in kg(for sugar & batch),piceces(for the sticks),cm for wrappers which am a little bit unsure if using different unit of measurement will give me an accurate cost.
secondly,i wanna know if i can input the direct cost of production into the “BOM” like labour,desiel for production factory managers salary and how i can get the right cost of this direct cost to the production of 1carton of lolipop.
well thats basically the problems i am having now.hope you can help me out.thanks
Canice, using different units of measure for different types of items if fine. You can use “pieces” for the sticks, “kg” for the sugar, all no problem.
For labor and similar non-material costs, read the article at http://www.sleeter.com/blog/2011/02/item-types-in-a-quickbooks-bill-of-materials/. You can include an item for labor (for example), but it will be an estimate or “standard” amount of labor. Unless you are using QuickBooks Enterprise you don’t have a good, simple way to enter the actual labor costs. However, this should be sufficient.