Manage your Inventory efficiently by creating and building Inventory Assembly item, which can be a combination of inventory part items and/or sub-assemblies into a single item.
An Inventory Assembly item is one type of line items used when creating a sale or purchase form. Creating and adding assembly items to inventory is a two-step process:
- First, define the Bill of Materials (BOM) to specify what components go into making the assembly item, then build a quantity of the assembly item so QuickBooks Desktop can deduct the component parts from the inventory and add new quantities of the assembled item.Note: As soon as you build an assembly item, its component parts no longer exist as separate parts in inventory because they have become part of a new inventory item called an inventory assembly.
- After assembly items are defined, they are added to inventory by "building" them. An assembly build is necessary to keep inventory quantities accurate.Note: Each time an assembly item is built in QuickBooks Desktop, the inventory parts and other assembly items (sub-assemblies) in the BOM are deducted from inventory, and the quantity of the assembly item increases.
Group items and inventory assembly items are similar in that they both let you record a group of items as a single entry on purchase or sales forms, but they also have some important differences.
|Group Items||Inventory Assembly Items|
|Cannot be included in another group item (nested) or in an inventory assembly item.||Can be included (nested) in other inventory assembly items and included in group items.|
|Enables you to print the individual items contained in the group on sales forms.||Prints only the assembly name, not component part names, on sales forms.|
|No reports available specifically for groups.||Appears after inventory part items on standard inventory reports; Pending Builds report lists assembly builds in the pending state.|
|Quantity on hand of each item included in the group is adjusted in inventory at the time of sale.||Quantity on hand of component items is adjusted in inventory when the assembly is built.|
|Sales tax is calculated by individual items included in the sales tax group item.||One sales tax code applies to the entire assembly, even if component item sales tax codes differ.|
|For groups of inventory parts, QuickBooks Desktop tracks inventory of items in the group, not the group itself.||QuickBooks Desktop tracks assembly items in inventory.|
|Price of a group item is the sum of the items in the group (although you can include an item in the group for a discount or additional charge to adjust the simple sum calculation).||Price of an assembly item can be anything you specify.|
|Can include both taxable and nontaxable items.||Must be designated as either taxable or nontaxable.|
|Can include any item type except other groups.||Can contain any of the following item types: service, inventory part, inventory assembly, non-inventory part, and other charge. Notice that you can include other inventory assemblies (sub-assemblies) within an inventory assembly.|
Group items are useful for quickly entering a group of individual items that you often purchase or sell together.
- If you often enter the same group of items when a sale or purchase is recorded, you can set up the items as a group item. Instead of entering each item individually when you fill out a form, enter the name of the group item. QuickBooks Desktop fills in the details for every item in the group.
- Detailed reports: Group items enable you to track the items that you sell in greater detail. For example, a construction firm that remodels houses could set up a group item that lists the significant components of a remodeling job: lumber, carpentry hours, markup, and so on. Sales reports for the company would then show income broken down by each component instead of a single lump sum for all remodeling jobs.
- Less detail for customers: If you need to track a lot of detail about your items but you also want to give your customers simple, uncluttered invoices, you can use group items to do both. Set up a group item so that the printed version of an invoice reduces a group item to a single line item with one amount. When the invoice is viewed on the screen, you see a separate line entry and amount for each item in the group.
- Fast data entry: Group items provide a way to quickly enter a great deal of line item detail. On a sales or purchase form, all you do is enter the name of the group item—QuickBooks Desktop fills in all the details.
Assembly items let you combine inventory items and assembly costs into new, separately trackable items that represent the finished goods you produce and sell.
- Track finished goods separately from individual inventory items: When you build an assembly, an assembled unit is automatically added to quantity on hand, and its component parts (inventory items or other assembly items) are automatically deducted from quantity on hand. By using assembly items, you always know how many assembled and component items you actually have in stock.
- Customize the price of assembled items: You can specify a price for an assembly that's different from the sum of its component items.
- Quick access to information about finished goods: You can easily access the date that items were assembled, the quantity and cost of assembled items, and a detailed list of component items.
- Set reminders for future builds: You can set a build point, and QuickBooks Desktop will remind you to build finished goods when stock is running low. At build time, QuickBooks Desktop will verify that you have enough component items in stock to build the specified number of assembly items.
- From the Lists menu, select Item List.
- Choose Item at the bottom of the list and select New.
- From the Type drop-down menu, choose Inventory Assembly. If Inventory Assembly isn't on the list, you need to turn on inventory tracking in preferences.
- Sign in to your QuickBooks company file as admin.
- Go to the Edit menu and select Preferences.
- On the left pane, choose Items & Inventory then go to the Company Preferences tab.
- Put a check mark on the Inventory and purchase orders are active box.
- Select OK.
- Enter a name or number that will distinguish this item from any others on the list.
- (Optional) To make the item a sub item, select the Sub item of checkbox. Then, choose the Sub item of drop-down arrow and select the parent item.
- (Optional) If Unit of Measure is available, assign a unit of measure.
- The next step depends on whether you will ever purchase this inventory assembly item from a vendor. Select the option that most closely describes your situation.
I don't plan to or I don't know if I will ever purchase this item from a vendor
- (Optional) In the Cost field, enter the total cost of this item assembly. This can simply be the total cost of the components listed in the BOM or can also include a markup amount and other costs not listed in the BOM. If you purchase the inventory assembly item instead of building it yourself, enter the Cost you normally pay for the item. If you don't enter an amount in the Cost field, QuickBooks Desktop uses the Total Bill of Materials Cost, which appears below the BOM table. This cost is the total of the costs of all the items listed in the BOM.
- (Optional) Cost of Goods Sold is pre-selected for COGS Account. If you want to charge the cost of selling this item to a different account, click the COGS Account drop-down arrow and choose a different account.
- In the Description field below the Cost field, enter the item description.
- If the sales price is not filled in for you, enter a sales price.
- If sales tax is charged, click the Tax Code drop-down arrow and choose a tax code for this item. (If you don't charge sales tax, you won't see the Tax Code field.)
- From the Income Account drop-down arrow, choose the account where you want income from the sale of this item recorded.
I will sometimes purchase this item from a vendor
- Select the I purchase this assembly item from a vendor checkbox to show the Purchase Information and Sales Information sections.
- (Optional) If you know it, enter the manufacturer's part number.
- (Optional) In the Description on Purchase Transactions field, enter a brief description of the item. Note that this is the item description your vendors will see. Also, what you enter in this field and the Cost and Preferred Vendor fields will appear by default whenever you add this item to a purchase form. Any of this default information can be changed when creating the form.
- (Optional) In the Cost field, enter either the last amount you paid for this item or the amount you expect to pay when you next buy it. If you've set a default markup percentage, you have to enter a cost in order for QuickBooks to automatically calculate the sales price.
- The Cost of Goods Sold account is pre-selected in the COGS Account field. You can choose a different account if you want to.
- (Optional) From the Preferred Vendor drop-down, select the vendor from whom this item is purchased.
- (Optional) In the Description on Sales Transactions field, enter a brief description of the item. This is the item description your customers will see. Note that what you enter in this field and the Sales Price and Tax Code (if applicable) fields will appear by default whenever you add this item to a sales form. This can still be edited when a form is created.
- In the Sales Price field, enter the price you will charge customers. If you've set a default markup percentage and entered a cost in the Purchase Information area, QuickBooks calculates and enters the sales price for you. You can change this price.
- If sales tax is charged, click the Tax Code drop-down and select a tax code for this item. (If you don't charge sales tax, you won't see the Tax Code field.)
- From the Income Account drop-down, select the account where you want income from the sale of this item assembly recorded. The account chosen for the item assembly can be different than the income account assigned to the individual items in the BOM.
- Add items to the Bill of Materials (BOM) list.
- Select a line in the Bill of Materials list.
- From the Item column drop-down, choose an item. Any of the following item types can be added to the Bill of Materials: Inventory Part, Inventory Assembly (as a sub-assembly), Non-Inventory part, Service and Other Charge.
- In the Qty column, enter the item quantity.
- If unit of measure is turned on and set to Multiple U/M Per Item:
- Leave the default Unit of Measure.
- From the U/M drop-down, choose a different unit of measure from the list, or select and fill out the information in the New Unit of Measure window.
- Fill in the Inventory Information fields. Inventory Asset account is pre-selected in the Asset Account field to track the current value of your inventory. You can choose a different account.Note: If you use the same account for all inventory items, the current balance of that account represents the current total value of your inventory. (Optional) When the quantity of this inventory assembly item gets down to the number you enter in the Build Point field, QuickBooks Desktop reminds you to build more. The Assembly Items to Build option must be selected in Reminders preferences for this feature to work.
- If you already have this item in inventory, enter the quantity in the On Hand field. Otherwise, leave the quantity at zero.
- If you have already entered both cost and initial quantity on hand for this item, QuickBooks Desktop enters the total value. The total value of an item is the cost multiplied by the quantity on hand. If you don't have any of this item in inventory yet, leave the value at zero.
- Today's date is pre-selected for the As of date, but you can choose a different date.
- (Advanced Inventory) Click Inventory Site Info to enter quantity on hand for each site. You can set up a different build point for each site (additional fees may apply).
- (Optional) Choose Custom Fields to fill in or define custom fields for this item.
- Select OK to record the item, or Next to save and start creating another.
Congratulations! You have now defined the components of the inventory assembly item and specified a beginning quantity for this item in inventory. In the future, each time you want to add more of this assembly item to inventory, an assembly build must be done.
After you create (define) an inventory assembly item, add assembly items to inventory by "building" them. When an assembly build is performed, the components are deducted from inventory and the quantity of assembly items increases accordingly.
- From the Inventory menu, choose Build Assemblies.
- From the Assembly Item drop-down, select an assembly item to build.Note: Depending on Inventory Preferences settings, you may or may not see the Quantity on Sales Order, Quantity Reserved for Other Assemblies, and Quantity Available information. The table in the middle of the Build Assemblies window lists the components (BOM) needed to build this assembly item. For each component, the quantity on hand and the quantity needed for the current build quantity are also shown. The quantity needed automatically updates as you enter different quantities to build. With Advanced Inventory, components can be selected from multiple sites. Directly below the table is the maximum quantity of this assembly item that you can build, given the current quantities of the components on hand.
- (With Advanced Inventory) Choose the Finished Assembly Inventory Site drop-down and select the site where the assembly will be stored after it is built. You can track multiple inventory sites with the Advanced Inventory add-on available in QuickBooks Desktop Enterprise US or Canada.
- From the Site drop-down, select the site each component will come from.
- Enter a quantity in the Quantity to Build field and press Tab to update the Qty Needed column in the components table.Note: If you enter a quantity greater than the quantity indicated by Maximum number you can build from the quantity on hand, you will be prompted to mark the build as pending. After marking the build as pending, you'll need to wait until there is enough inventory on hand before marking the build as final.
- (Optional) Change the build date only if you need to. The ability to complete a build is directly dependent on the quantities of component items available in inventory on the date of the build. Changing the build date could have any of the following effects:
- Any or all quantity information displayed in the Build Assemblies window could change.
- Your ability to complete the build could change.
- The status of other completed builds could change to pending.
- (Optional) Enter a memo about this build.
- (Optional) Assign a Build Reference Number to this build.Note: If the Assembly requires a sub assembly and the checkbox to automatically build required subassemblies is selected, QuickBooks automatically assigns a Build Reference Number for the sub assembly first, before the main assembly. Regardless if you assign a specific Build Reference Number.
- Select Build & Close to finalize this build or Build & New to finalize the build and start a new one.
After an inventory assembly item has been created in QuickBooks Desktop Premier or Desktop Enterprise, you can use any edition of QuickBooks Desktop to edit existing assembly definitions.
- On the QuickBooks Home screen, go to the Company section and select Items & Services.
- Double-click any inventory assembly item.
- In the Edit Item window, choose the Edit Item button.
- Make any necessary changes.Note: You can change the list of components for an assembly item at any time. However, assembly revision history is not tracked so if you need to build a previous version of an assembly, edit the assembly and reenter the original component list. View a previous component list in the build transaction for that particular build. While you cannot delete assemblies that have been used in transactions, you can make them inactive. Inactive items are hidden in the Item list and do not appear in drop-down that displays items. You cannot delete inventory parts or assemblies used as components of assemblies (even if the assemblies are inactive) unless they are removed from all assemblies that reference to them.
- Choose OK.
Change or edit an inventory build
You can change both pending and finalized inventory assembly builds.
- From the Reports menu, go to Inventory > Pending Builds. If you use Advanced Inventory, you can also choose Reports > Inventory > Pending Builds by Site which allows you to track multiple inventory sites.
- Print the Pending Builds report. The status (pending or final) of an inventory assembly build is directly tied to the status of inventory on the specified build date. The only way you will know if a change you make to an assembly build causes other assembly builds to become pending is to run the Pending Builds report before AND after you change an existing build.
- From the Pending Builds report, double-click the inventory assembly build you want to change to open the Build Assembly form.
- Make the necessary changes to the build information.
- Select Build & Close to save your changes.
- Run the Pending Builds report and print it again.
- Compare the most recent report to the first to see if the changes caused any other assembly builds to become pending. If the status of other assembly builds has changed to pending, wait until there is enough inventory in stock and mark those assembly builds as final again.
Disassemble an inventory assembly item to return components to inventory
There are three ways to disassemble an assembly and return inventory components to inventory. Choose one of the following options:
Option 1: Adjust the quantity on hand for each assembly component and assembly item
The value of your inventory directly affects your financial statements so keeping it accurate helps ensure the accuracy of financial statements. If the value of an inventory item changes due to such various things, such as seasonal demand or spoilage, you'll need to decide if the change is significant enough to warrant a value adjustment.
- Choose Inventory Activities from the home screen and choose Adjust Quantity/Value on Hand.
- In the Adjustment Type drop-down, select Total Value or Quantity and Total Value.
- Enter the date of the adjustment.
- From the Adjustment Account drop-down arrow, select the account where inventory adjustments are tracked. You may want to create a new account just for tracking inventory adjustments.Note: Because inventory adjustments tend to reduce inventory value, create the new account as an expense account. However, if your inventory mostly increases in value over time, create an income account. Consult your accountant if you aren't sure what type of account to use. If you make adjustments to more than one item and need to assign the adjustments to different accounts, you'll need to create multiple adjustments; one for each account.
- From the Inventory Site drop-down, select the site where the adjustment should be applied. Note that when making a Total Value adjustment, a site cannot be selected because value is calculated across all sites.
- (Optional) Enter a reference number.
- (Optional) If you want to assign this adjustment to a customer or job, select the Customer:Job drop-down arrow and choose a customer or job.
- (Optional) If you use class tracking, choose the Class drop-down arrow and select a class.
- Select the Item column to add items. For each item with a value you want to change, calculate the new global value. Multiply the new individual item value by the current quantity on hand. The amount displayed for an item in the Total Value column represents the value for the entire quantity of that item currently in inventory. The value is calculated by multiplying the item's current average cost by the current quantity on hand. Note that you can't select an inventory site when you are doing a value adjustment, because inventory value is calculated across all sites.
- (Optional) Enter a memo in the Memo field to remind yourself later why you made this value adjustment.
- Save the adjustment.
Option 2: Reduce the quantity of an existing build transaction and rebuild
- Open the completed (final) build transaction for the inventory assembly in one of the four ways listed.
- Using the Advanced Find feature:
- From the Edit menu, choose Find.
- Go to the Advanced tab.
- In the Choose Filter section, go to the Filter list and select Transaction Type.
- From the Transaction Type drop-down, select Build Assembly.
- Choose Find.
- Double-click a build to open the build transaction.
- Open the completed (final) build transaction for the inventory assembly using the Previous and Next buttons in the Build Assemblies window:
- From the Inventory menu, select Inventory Activities then choose Build Assemblies.
- Select Previous and Next to display existing builds in sequential order by date.
- Open the completed (final) build transaction for the inventory assembly using the Inventory Item Quick Report:
- On the QuickBooks Home screen, go to the Company section and choose Items & Services.
- Select the assembly item whose build transaction you want to view.
- Choose Reports at the bottom of the Item List window and then select Quick Report: [assembly name].
- In the report, double-click the build transaction you want to view.
- Find and open a pending build transaction
- From the Reports menu, select Report Center.
- In the Report Center window, choose Inventory > Pending Builds.
- In the report, double-click the build transaction you want to view.
- Using the Advanced Find feature:
- Enter a lower value in the Quantity to Build field.
- Select Build & Close.
Component inventory parts and sub-assemblies are increased in inventory and the number of assemblies specified in the build definition is reduced by the difference of the original build quantity and the new one. If the build transaction you're editing is pending, the changes you make do not affect the quantity on hand of components and assembly items.
IMPORTANT: QuickBooks Desktop does not track the quantity on hand of an assembly by specific build. This means that if you've already built the assembly more than once, you may have assemblies remaining from more than one build transaction. These assemblies are tracked as one quantity—even if you edited the components list between builds. We recommend that you sell out of a quantity of assembly items before editing the assembly's components list and rebuilding.
Option 3: Delete the build transaction for an assembly item
- Open the completed (final) build transaction for the inventory assembly. For detailed steps, see Option 2 Step 1 (a - d).
- From the Edit menu, choose Delete Build.
- Select OK to confirm the deletion.
When assembly build transactions are deleted, all component inventory parts and sub-assemblies on the BOM are returned to inventory, and the quantity of the assembly item in inventory is reduced. However, if the deleted build transaction is pending, the deletion does not affect the quantity on hand of components and assembly items.
Compute for Cost of Goods Sold (COGS) on build assembly
There are different rules to account for Cost of Goods Sold (COGS). QuickBooks uses the weighted average cost to determine the value of your inventory and the amount debited to COGS when you sell inventory. The average cost is the sum of the cost of all of the items in inventory divided by the number of items.
Here's how QuickBooks compute COGS for an Inventory Assembly item:
Printing assemblies is ONLY available in QuickBooks Desktop Enterprise versions.
- Choose File > Print Forms > Assemblies.
- If the build assembly you want to print is not displayed, look at the build assembly form and make sure the "To be printed" checkbox is selected. You'll see a list of all the build assemblies marked to be printed.
- QuickBooks Desktop assumes you want to print all of them, so each one is selected in the list. If you don't want to print a particular build assembly now, choose to clear the checkbox next to it.
COGS should never be affected on a Build Assembly if the item is set up correctly. However, if an assembly item is sold without sufficient quantity prior to it being built, COGS can be affected.
|Here's a sample scenario:
A unicycle (assembly item) was built only after it was sold (on Sales Receipt).
In situations like this, QuickBooks needs to do some adjusting calculations to ensure accounting is correct.
To prevent this issue, you need to build assembly items prior to selling to avoid negative quantities or turn on the preference in Items & Inventory to ‘Don’t allow negative quantities’.