I recently started a company that buys individual items (Raw Materials) and assembles them for resale (Finished Product). I use Quckbooks Desktop.
(any tips to improve my process would be appreciated)
In order to handle inventory for both raw materials and the finished products, I have Inventory Part items for each raw material with the cost per item/COGS/Inventory Asset account/minimum reorder quantity, etc. However on the Sales Information side I keep the sales price at 0.00 for the Raw Materials.
I also have an Inventory Part item for the Finished Product when it goes "on the shelf" for sale. This "Cost" is $0.00 and the Sales Price (e.g., $50)
When the Finished Products are assembled I adjust the Quanity on Hand of the Finished Products in Inventory
Then when an item is sold, on the invoice/receipt I include all Raw Material parts (price = 0.00) and the Finished Product the customer is purchasing (price = $50).
Essentially, this keeps the Quantity on Hand of Raw Materials whole, until a finished product is sold, rather than just assembled. Because if an assembled product never sells, then there's no point in ordering more raw materials of those parts.
I haven't yet received all of the raw materials, so assemblies haven't started, yet, but this method seems to make sense, in theory.
