Creation of an "item" for manufacturing components and assigning an income account

asaylor · ‎March 20, 2021

Back story: We have recently purchased QuickBooks Premier Desktop 2021 & chose Manufacturing as our industry. We are producing and selling bath & body products & purchase raw materials (ie: sugar, coconut oil, essential oils) as well as the containers to put the finished product into to sell.

Problem:

I need help with understanding how to create & set up "items" in QB. It is my understanding that I should first create an "inventory part item" that is the end product (ie: sugar scrub) with its total cost & expense in COGS, the sales price for that product & size then code to its particular income account. So assuming that part is correct...here's the problem:

Creating the item for the various raw material components, etc. It requires me to assign an income account to sugar for example but since I'm not selling sugar...or any of the raw materials, I can't assign an income account. And even if I used the "inventory assembly" or "non-inventory" item instead, it still requires the income account to be filled in if I'm going to build with it.

Question:

How do I set up these items? Example:

Cash purchase of sugar from supplier
Record in check register w/item indicating the sugar material
It flows through to the bucket of materials I will be using to make my scrub
I make my batches of scrub using the "bill of materials," it pulls from the stock in the buckets & tracks how much I use, need to order & when, etc
Once the batch is complete & in jars to sell, it automatically moves it from WIP to the Inventory Asset account ready to be sold
I sell some which creates an invoice & moves it from the asset to the income account I assigned for that "end product item"

Please....Can someone help me?

Thank you!

Adrian_A · ‎March 20, 2021

Thanks for the details, asaylor.

We can use the Assembly feature in QuickBooks Desktop. This way, you can build and track your finished goods or unit of measure.

Also, let's ensure to select the inventory type, so COGS will be automatically calculated by the system.

After adding the inventory items individually, you're good to assemble the4m. Let me guide you how:

From the Lists menu, select Item List.
In the Item drop-down, select New.
Select Inventory Assembly.
Click the Enable button under UNIT OF MEASURE.
Select a mode. Then, continue with the on-screen instructions.
Select the items to build.
You can add a Memo.
Click OK.

I've added this reference for more information about the feature:

I'll be around if ever you need help in managing your inventories. Keep safe!

View solution in original post

Adrian_A · ‎March 20, 2021

Thanks for the details, asaylor.

We can use the Assembly feature in QuickBooks Desktop. This way, you can build and track your finished goods or unit of measure.

Also, let's ensure to select the inventory type, so COGS will be automatically calculated by the system.

After adding the inventory items individually, you're good to assemble the4m. Let me guide you how:

From the Lists menu, select Item List.
In the Item drop-down, select New.
Select Inventory Assembly.
Click the Enable button under UNIT OF MEASURE.
Select a mode. Then, continue with the on-screen instructions.
Select the items to build.
You can add a Memo.
Click OK.

I've added this reference for more information about the feature:

I'll be around if ever you need help in managing your inventories. Keep safe!

asaylor · ‎March 21, 2021

Hello Adrian_A,

Thank you for your reply to my post yesterday!

I'm sorry I have to say this but your reply did not answer my question. :(

The main problem is when I try to create a new "item" (inventory part or assembly item or non-inventory item), within the sales information section/block, I don't know what to enter in the "income account" since I don't sell the individual components. I sell sugar scrub as a whole, not sugar or coconut oil individually. Understand?

Thank you again!!

MichelleBh · ‎March 21, 2021

Thanks for coming back on this thread, @asaylor.

I appreciate you for clarifying your concern about creating an item in QuickBooks Desktop.

The Income account in the Sales Information is used to track the amount you earn from selling the item. Since you didn't sell anything, I'd recommend reaching out to an accountant. This way, they can help you choose the right account.

If you don't have one, please visit this link to find an expert: https://quickbooks.intuit.com/find-an-accountant/.

I'd also encourage you to visit these articles below about how to edit item types, combine two items, and other relevant matters.

Feel free to leave a message below if you have further questions about creating an item. I'm always here, ready to guide you. take care always.

asaylor · ‎March 21, 2021

Hi MichelleBH,

Thank you so much for replying to my confusing question!

After my last post, I followed the link on the side of Adrian's suggested link and found "Create new products and their variants" which evidently is in the QB Commerce....I'm now wondering if I even made the correct purchase of the Premier Desktop...should I have gone with the Commerce? Or hay is there a way to combine the two programs???

Thanks Michelle for your help!

MJoy_D · ‎March 21, 2021

It’s our pleasure to help, @asaylor.

I can share some insights about QuickBooks Commerce.

It depends on the features that you need. An active QuickBooks Online (QBO) Essentials, Plus, or Advanced is required to use QuickBooks Commerce.

QuickBooks Commerce integrates data with QBO that can help you manages your entire business. Your inventory, sales data, customer information, and expenses will automatically be recorded in your books.

Here's the QuickBooks Commerce link for more information.

Check the following article for more information on how to manage your product listings, orders, and inventory across sales channels using QBO: QuickBooks Commerce.

Let me know if there's anything that you need with your account and or with QuickBooks Commerce. I'm always here to answer them for you. Take care and have a wonderful day!

asaylor · ‎March 21, 2021

Hello MaryJoyD,

Wow I'm really surprised at the kind people trying to help me!! Thank you!!

As for QBO...yes, I had QBEssentials, but the sales people never suggested that I could possibly connect it to the Commerce in order to deal with our small manufacturing product creation, tracking and sales. I have a feeling I've made an error in switching to QB Premier Desktop 2021 using the Manufacturing industry ($600!!), as it is sounding like it's not going to work for my needs. I'm very disappointed to say the least!! And am not sure what I will be able to do. I plan to call Sales in the AM to see what they can do for me.

Thank you so much for your help and suggestions!

I very much appreciate all of the help I have received from all of you!

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Creation of an "item" for manufacturing components and assigning an income account