The company I work for uses a co-packer for two of their items. We send all of the raw materials and packaging to them and they produce the pouches we need and send them all back in huge boxes. We receive them, package them into their cases, and ship them out to our customers. Here are my questions:
1. They have the co-packing services set up as a service for one and "other charge" for the other item. Shouldn't they both be set up as a service? They also have the account listed as an inventory asset account.
2. Each item has their own number and a corresponding item (ex., item 100 and item 100-c) included in the build so it can pull in the materials used at the co-packer. The co-packer has a build (including the raw materials and packing needed to make the item) and then there is another build used to package the product in our facility when it is received back. (co-packing item 100-c and the remaining packaging needed to ship out). The 100-c item is in our inventory valuation as an assembly item even though it always shows 0. Is this correct?
3. Lastly, when we send out the material to the co-packer, it's shown in QB as a transfer to an offside warehouse. When it's received, they create an item receipt using the service and the other charge item number and use the cost the co-packer charges them. The balance sheet shows the difference as that exact item receipt. How do we receive the items back into our inventory?
The items were not set up properly and I need to know how to create a better process.
Thank you so much for any help you can provide!!