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Level 2

Maintaining a sub-inventory category

We are a small gifts printing business that does printing on t-shirts, mugs, etc. We sell online usually  which is a print on demand basis and have just opened a retail kiosk at a mall recently where we intend to sell pre-printed t-shirts and mugs as opposed to the print on demand we do for online orders. We track the mugs, t-shirts and the printing material as inventory like vinyl, printing paper etc and need to create new SKU codes for the inventory held at the retail kiosk as these are some pre-printed designs. The only workaround I am aware of is to do a zero bill concept. we don't purchase exclusively for the kiosk and hence whenever we purchase materials it goes as inventory. When we opened the kiosk, we created some pre-printed designs we have kept there for which we used the items from the inventory.  

 

In this example, consider I have 200 mugs in inventory and I am pre-printing 10 mugs for selling at the kiosk. Each mug was purchased for 2.50/- (sometimes we may get a discount and get the mugs for slightly less per pc or use a different supplier who may have a slightly different price). But majority of the purchase happens at this fixed price of 2.50. the printing paper we use costs .25 cents for each paper. Assuming we used 4 papers to print on the 10 mugs, the total cost of the pre-printed mug we will be selling at the kiosk is 10*2.50 + .25 *4 = 26/ 10 = 2.60.

 

I am creating a new payee called Kiosk Inventory Adjust and created new item codes for the pre-printed inventory called Kiosk:Mugs.

Under Item Details Section > I use the inventory item code for the regular mugs with qty -10 and rate 2.50 totalling $ 25 and the item code for the printing paper with qty -4 and rate .25 totalling $1. For both items, i usually run an inventory valuation detail report to find out the cost that is charged for the next unit sold on the date i am recording this inventory for the kiosk. 

I then use the new SKU created  kiosk:Mugs and add 10 as qty, rate as 2.60 and total as 260 to ensure the bill has a zero balance.

 

However, when i save the transaction I notice it is posting a .01 fils or sometimes a .28 fils depending on the item used to COGS which I am ending up to adjust manually every time to ensure no impact on COGS is coming from this sort of inventory recording method. Is there any way I can correct for these or find the actual cost of the mugs and paper to use such that no system generated entry to COGS is being posted. If i review the COGS account, it shows me an entry with source as bill qty 0, rate .01 and the total of .01 which it is adjusting from the above bill. If its .01 its immaterial, but sometimes its .28 cents or .32 cents and I am unable to find out the reason for this entry when I am already checking the inventory valuation detail report to see what it charged for the next unit sold on the same date i am moving the inventory to the kiosk SKU's. 

Solved
Best answer January 05, 2020

Best Answers
Highlighted
Level 15

Maintaining a sub-inventory category

When intuit decided to go with FIFO inventory, they did not provide adequate reporting and inventory handling. It was designed to just buy and sell the same item. The inventory valuation summary and detail report shows you approximate average cost per item, but in reality QB will use FIFO cost (fifo is average cost per purchase per purchase date). As a result you can get some weird numbers showing as you noticed.

 

IMO you are trying to micromanage things a little too much. If this were me I would print the 10 mugs and move those 10 mugs to a finished mug item the only way it works well in QBO. The paper is just an expense, I would not even stock it as inventory myself, but if you want then just use inventory adjust, lower the paper count and use COGS as the adjusting account.

 

To move an inventory item from one item to another in QBO, I do it this way. Use inventory adjust, set the adjusting account to a cash type bank account and lower the qty on hand. Now you have an accurate cost for the 10 mugs as a deposit to the cash account. "buy" the finished mugs, qty=10, for the same amount paying for the purchase from the cash type bank account. now sell the finished mug.

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1 Comment
Highlighted
Level 15

Maintaining a sub-inventory category

When intuit decided to go with FIFO inventory, they did not provide adequate reporting and inventory handling. It was designed to just buy and sell the same item. The inventory valuation summary and detail report shows you approximate average cost per item, but in reality QB will use FIFO cost (fifo is average cost per purchase per purchase date). As a result you can get some weird numbers showing as you noticed.

 

IMO you are trying to micromanage things a little too much. If this were me I would print the 10 mugs and move those 10 mugs to a finished mug item the only way it works well in QBO. The paper is just an expense, I would not even stock it as inventory myself, but if you want then just use inventory adjust, lower the paper count and use COGS as the adjusting account.

 

To move an inventory item from one item to another in QBO, I do it this way. Use inventory adjust, set the adjusting account to a cash type bank account and lower the qty on hand. Now you have an accurate cost for the 10 mugs as a deposit to the cash account. "buy" the finished mugs, qty=10, for the same amount paying for the purchase from the cash type bank account. now sell the finished mug.

View solution in original post

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