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Level 3

Applying additional costs to inventory items

Dears ,,

 

Is there any way we can add shipping , custom duties , insurance and other costs to inventory items after we receive the items invoice from the Vendor ?

 

Example :

We purchased 10 units Inventory Item A with with 10 $ cost each , we paid 3 $ shipping cost for each and we paid 2 $ for each as custom duties .

 

How we can apply these costs to affect unit cost in inventory to be 15 $ instead of 10 $ ?

16 Comments
Moderator

Re: Applying additional costs to inventory items

Hello there, @wkittani!

 

You have the option to change the rate of your inventory items. And I'm here to help you how.

  1. Go to the Sales page.
  2. Select Products and Services.
  3. Find your inventory items.
  4. Under the ACTION column, click Edit.
  5. Enter the amount in the Sales price/rate.
  6. Click Save and close.

Once done, you can now change the sales rate of your inventory items.

 

Here's an article you can read to learn more about the steps: How to Set up Inventory Tracking?

 

However, I still suggest adding the mark-up rate of your inventory item and contacting your accountant first for further assistance.

 

It'll be my pleasure to help you here in the Community if you have any other questions.

Highlighted
Level 3

Re: Applying additional costs to inventory items

May be you didn't get my point , what you mentioned is to change selling price . 

But my question is how to affect the unit cost by additional expenses like shipping , insurance , custom duties , which are not mentioned in the same purchase invoice , it comes with different invoices .

QuickBooks Team

Re: Applying additional costs to inventory items

Hi wkittani

 

You can add the additional expenses such as the shipping fee, insurance, and customs duties by editing the expense account of the inventory item.

 

Here's how:

  1. Go to Sales, then choose Product and Services.
  2. Look for the inventory item, then click Edit.
  3. In the Expense Account drop-down, choose Cost of Good Sold.
  4. Enter the cost with the additional expenses of the unit.

Once done, your additional expenses will be added to the original cost of the unit. However, please take note that changing the original unit cost will affect your reports. I would recommend consulting for an accountant to be advised on how to record the additional expenses.

 

Feel free to visit the Community team if you have an additional question. We'll be right here to help.

 

Level 10

Re: Applying additional costs to inventory items


@Joyce_P wrote:

Hi wkittani

 

You can add the additional expenses such as the shipping fee, insurance, and customs duties by editing the expense account of the inventory item.

 

Here's how:

  1. Go to Sales, then choose Product and Services.
  2. Look for the inventory item, then click Edit.
  3. In the Expense Account drop-down, choose Cost of Good Sold.
  4. Enter the cost with the additional expenses of the unit.

Once done, your additional expenses will be added to the original cost of the unit. However, please take note that changing the original unit cost will affect your reports. I would recommend consulting for an accountant to be advised on how to record the additional expenses.

 

Feel free to visit the Community team if you have an additional question. We'll be right here to help.

 


This is wrong. You should ask for training

Level 3

Re: Applying additional costs to inventory items

Hello Dear ,,

 

I tried the way you mentioned but it did not make any effect on the unit cost or any financial effect .

 

This way did not work .

QuickBooks Team

Re: Applying additional costs to inventory items

Thank you for getting back to us, @wkittani.
 

I appreciate your effort in testing the steps given by my colleagues.

 

Allow me to add in a few details about your inventory cost.

 

QuickBooks follows First In, First Out (FIFO) when tracking your inventory. If you enter an amount for the quantity available, that’s the amount QuickBooks follows for your Cost of Goods Sold

 

With this said, when you enter a new cost amount, it will also affect your new purchases.

 

Feel free to read this article about FIFO to understand it better: What is FIFO and How is it Used For Inventory Cost Accounting?

 

Please let me know if you have any other concerns.

Level 3

Re: Applying additional costs to inventory items

Hi Alissa ,,

 

I fully understand the FIFO inventory evaluation method in addition to all other ways .

But still no one answered may question i raised .

I dont want to change the unit cost intentionally , i purchased one Iphone with 1000$ , the supplier sent me his invoice with 1000 $ , the shipping company sent me another invoice for 30 $ shipping cost  and 5 $ insurance cost . 

 

So the Iphone cost is 1035 $ not 1000 $ . my question is how to enter these invoices for 2 different vendors and affect the inventory unit cost by 1035 $ not 1000 $ ?

Level 3

Re: Applying additional costs to inventory items

My Suggestion to solve this issue is to do the following enhancement in Purchasing screen .

 

Add one field called additional costs , in my example 35$ we put , then another field called additional costs control account (GL Account ) . then we we make the purchase of the Iphone mentioned in our previous example , the following GL Entry will be created :

 

Dr. Inventory   1035 

Cr. Iphone Vendor    1000

Credit Additional expenses Control account   35  

 

When we pay the 2 vendors of Iphone and shipping separately , the Entries will be :

 

Dr. Iphone 1000

Credit Bank    1000

 

Dr. Expenses control account   35 

Cr. Bank        35 

 

So here the control account is closed and the inventory item was recorded with 1035$ .

 

By this way i didn't change any costs manually .

 

Feel free to discuss if there is anything not understood .

 

 

Level 15

Re: Applying additional costs to inventory items


@wkittani wrote:

Dears ,,

 

Is there any way we can add shipping , custom duties , insurance and other costs to inventory items after we receive the items invoice from the Vendor ?

 

Example :

We purchased 10 units Inventory Item A with with 10 $ cost each , we paid 3 $ shipping cost for each and we paid 2 $ for each as custom duties .

 

How we can apply these costs to affect unit cost in inventory to be 15 $ instead of 10 $ ?


@wkittani 

Do NOT do the procedure that @JonpriL  proposed. it will mess up the accounting and is wrong.

 

outside costs require a work around

create a cash type bank account called clearing

post all extra costs to that account (shipping, customs, etc)

 

then edit the original bill

1. in item details, increase the total cost of each item by a portion of the total in the clearing bank account

2. change to the account details part, select the clearing bank account and enter that amount as a negative number.  Insure the bill is still for the original amount, save and click through any warnings about payments being applied

Level 3

Re: Applying additional costs to inventory items

Hi Dear ,,,

 

I didnt get your point on the last step . to edit the bill and change cost and ......

 

can you attach screenshots explaining it .

Level 2

Re: Applying additional costs to inventory items


I have the same issue(in QBPOS, but QBDesktop uses same inventory math), and came here to see if there is a better solution than what i came up with. I did not see one yet.

in your case:


current inventory qty 10 cost each $10 total cost $100
you want qty 10 at total cost of $150

do a 'receive item' transaction:

  1. for qty 1 at $50
  2. qty of -1 for $0

 

Now you have 10 items and your total cost is $150


if you wan to test, do a backup first and just restore from the backup

Level 15

Re: Applying additional costs to inventory items


@MikeMakesWhisky wrote:


I have the same issue(in QBPOS, but QBDesktop uses same inventory math), and came here to see if there is a better solution than what i came up with. I did not see one yet.

in your case:


current inventory qty 10 cost each $10 total cost $100
you want qty 10 at total cost of $150

do a 'receive item' transaction:

  1. for qty 1 at $50
  2. qty of -1 for $0

 

Now you have 10 items and your total cost is $150


if you wan to test, do a backup first and just restore from the backup


If you do that, the added cost of the item is TAKEN out of the COGS account which is not correct

 

and in an audit, that is not going to fly since there is no supporting documentation for what is going to be perceived as juggling the numbers

Level 2

Re: Applying additional costs to inventory items

I am talking about *receive items*, not a sales transaction

 

Per this link

  • COGS - "Normally, inventory COGS is affected only when you sell inventory items on invoices or sales receipts. "
  • Income - sales
  • Asset - "When you purchase an inventory item, your Bill, Check or Credit Card Charge will debit the Item's Inventory Asset account and credit you A/P, bank or credit card account."

So you see, doing a + an -  'Receive Item' does not touch the COGS...

 

Just keep the the receipt for the shipping bill and you have your supporting documentation.

 

 

Level 10

Re: Applying additional costs to inventory items


@MikeMakesWhisky wrote:


current inventory qty 10 cost each $10 total cost $100
you want qty 10 at total cost of $150

do a 'receive item' transaction:

  1. for qty 1 at $50
  2. qty of -1 for $0

 

Now you have 10 items and your total cost is $150




 

Interesting solution which may work for QB Desktop which uses the average method. But this question is for QBO which uses the FIFO method, where it definitely won't work

Level 2

Re: Applying additional costs to inventory items

Good point, I am working in QBPOS and QB Desktop Pro.  I guess you have to RTV the entire lot for original cost and Receive them back at new cost and have your documentation handy if/when needed. 

 

I really dislike how intuit doesn't have a separate forum for the different products since they are so vastly different in operation and capabilities...

Level 10

Re: Applying additional costs to inventory items


@MikeMakesWhisky wrote:

I guess you have to RTV the entire lot for original cost and Receive them back at new cost 

 

 


Good idea. This works, and is easier than using a clearing account. 

On the expense transaction for the freight vendor, enter 2 lines; one is the entire lot as a negative at the purchase cost of the item, and the other is the same quantity as a positive, but at the landed cost, so the net is what you paid the freight vendor.

 

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