COGS for an assembly item

When running a business, it's important to have an accurate COGS costs. Checking the report and items setup is an excellent place to start to figure out what's causing the problem. I appreciate you doing this, @Wm_Shrewsbury.

I'll help you reset the COGS in your QuickBooks Desktop Premier Manufacturing & Wholesale account to $35, which is the right amount. So, you can file the revised tax return, and your taxes will always be correct moving forward. 

It is conceivable to have a negative COGS if your number of returns exceeds your sales for a specific accounting period or if there is a correction on inflated expenses from a previous accounting period.

To reset your COGS cost, follow the steps below: 

1. Go to the Lists and select Item List. 
2. Find and double-click the assembly item. 
3. Hit Edit Item beside Bills of Materials. 
4. Reset the cost to $35 and hit OK. 

In addition, QuickBooks keeps track of the average cost of each item, so as you buy new stock, the average rate of each item may go up or down. This average cost on the day the assembly is built is used for each build, and it is almost hard to find this average cost in the past.

But if item X is used only in an assembly, you could use a buy report for that item, get the quantity used in the date range, and do the math to know how much item X costs.

Moreover, if you're unable to reset the costs, may I ask a screenshot on your assembly item? This way, I can further examine and provide another solution to help fix the issue as soon as possible. 

To learn more about inventory assemblies, check out these resources for your reference:

• Combine your inventory items to build finished goods.
• Track the products you manufacture.

I'll be around here in the Community if you require additional information about inventories in QuickBooks. Happy to help you again. Keep safe always. 

Hi Michelle! First, thanks for assisting. When I follow the directions you gave me it doesn't change the outcome. Attached is an example of an Assembly Item (a harness, in this case).

When I click on "Edit Item" I see the screen below, which is allowing us to edit only the single item that is part of the BOM this product is composed of.

If I go to "Full View" instead, I get the screen below (full BOM) and of course editing an item brings me back to the screen above.

So, in this example, we should see a small profit of $4.50. Instead, when I run the Income by Customer Detail report we show a loss (-$65.92). Over the course of a year this adds up a LOT, especially when we make literally thousands of these for our customers.

So, our question, is how do we get QB to reset the COGS to the actual COGS so that our reports are correct?

Thanks again for looking into this.

(Sorry for the repeat post - I deleted this one.)

I know how crucial it is for you to resolve the COGS, @Wm_Shrewsbury. Let me help you fix this in QuickBooks Desktop.

Before that, may I ask for a screenshot of the -$105.00 shows discrepancies on your COGS?

Moving forward, you can run the Verify/Rebuild tool. Verify will catch any damaged data. Rebuild will attempt to fix the damaged data detected. It also permits your QuickBooks software to restore the data inside the company file.

 Let's ensure creating a backup copy of your company file before doing the Verify and Rebuild process. If changes occur, having a backup copy allows you to restore it to undo the changes.

Follow the steps below on how to verify data:

1. On the top menu, click File.
2. Choose Utilities.
3. Select Verify Data.
4. Click OK when you see the message.
5. If Verify finds an issue with your data, press the Rebuild Now or View Errors.
6. Click Close or View Errors and take note of the specific error message.

Next, here's how to rebuild data:

1. On the top menu, click File.
2. Choose Utilities.
3. Select Rebuild Data.
4. Click OK if you receive a prompt to back up your company file.
5. Press OK when you get the message "Rebuild has completed and proceed to the next step.
6. Then, run Verify Data to make sure there's no error.

Moreover, I've got an article for you about managing your inventory items: Understand inventory assets and the cost of goods sold on the track.

Know that we are here to provide more information about managing your COGS. Notify me again if you need additional assistance. Take care. 

Well, that didn't fix it (same results as the above screen shots), however I was finally able to figure out what to do from this point on via this video: https://www.youtube.com/watch?v=QtXYs9hCTGk

When this inventory list was created 3 years ago it was imported from another companies records. Perhaps there was something amiss there, we don't know now that we've long since removed that QB file from our computer. Looking at my screen shots above I can see that the item has an average cost of $101.58767. The solution, moving forward, is to change this average cost as shown in the linked video. This fixes it for now, until we change our prices with any updated item costs for this assembly. I guess when we get some price increase/decrease for an item of an assembly we'll just have to go in and reset how many we have on hand and what that new costs is manually - NOT an ideal solution, and frankly one that in my opinion is incorrect. Math simply doesn't work this way - we do not list the cost of an item as an average over the life of an item, but as the actual cost of that item at the time of making the assembly/selling that item.

Is there a way to make QB Desktop use FIFO instead of FIAOLPNPF (First In Averaged Over Life of Product's New Price Forever) automatically? If not, we may have to abandon QB since the costs of a product will change over the course of the year for nearly every assembly we make.

Thanks for trying the recommendation above and sharing a way to handle COGS, @Wm_Shrewsbury. Let me chime in and share information with you.

At the moment, only QuickBooks Desktop Accountant and Enterprise versions can switch from Average Cost to FIFO option through advanced inventory. Thus, making QuickBooks Desktop Premier use FIFO instead of FIAOLPNPF (First In Averaged Over Life of Product's New Price Forever) automatically isn’t possible.

I recognize how convenient the option is for you. You can use the Feedback feature to send this idea straight to our Product Development team. This way, they could take action to help improve your experience. I’m glad to show you the steps:

1. In your QuickBooks account, click the Help option.
2. Select the Send Feedback Online option.
3. Choose Product Suggestion.
4. Enter your feedback.
5. Click the Send Feedback button.
   

To efficiently organize your inventories in the program, check out this page for more tips and insights: Handle your products and services in QuickBooks.

If you need further assistance managing your items, you can get back to this thread anytime and add comments. I want to make sure all your concern is fully addressed. Have a great rest of the week!