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Join nowOne of my vendor only charges me for labor cost
Basically, I purchase all the raw materials and send them to him, he assembles the product and bills me only for his labor cost. Each product has a fixed labor cost fee.
How do I categorize it in quickbooks?
Thank you for posting here in the Community, @NS2020.
First off, you can create a bill for the raw materials under the vendor where you purchase the product.
Then, create another bill for the labor cost. You can create a labor cost account with sub-accounts (products) or create items for the labor associate to the labor cost account.
Here's how to create an Account for the labor cost:
Additionally, to keep you books accurate, I suggest consulting an accountant to guide you in choosing a specific expense account.
Also, in QuickBooks Online (QBO) you can pull up a report that will show you the last categories used for a specific vendor.
Here's how:
Reach out to me if you have any follow-up questions. I'm here to help further. Take care always and have a good one.
Hi Divina,
Thank you for your reply. I thought cost of labor should be part of cost of goods sold, since it is one of the "component" that is used to assemble the product so it is part of the goods sold.
Thanks for coming back, NS2020.
You have a point. Labor cost is part of cost of good sold. However, labor is considered as expense reason why we recommend creating a separate account for labor cost under expense account. Of course, it would still be best to consult your accountant to guide you in dealing with this type of situation.
I'm adding this reference for more information about managing inventory assets and cost of good sold in QuickBooks Desktop: Understand inventory assets and cost of goods sold tracking.
Be sure to get back to me if there's anything else you need clarification with. Have a good one.
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