Labor in inventory assemblies

Are you using QB Online or QB Desktop (i.e Premier/Enterprise)?

QB Desktop Enterprise

I have same question, need to add a line in assembly for labor

Hey there, @Liftco. 

Thanks for following the thread and sharing your concerns.

A part of using an assembly item is what it is made of. We like to refer to this as bill of materials. Within the bill of materials, there are components. You'll want to focus on the components in order to add the labor cost. Once your settings are in order, you'll set up all the parts you use to build your product. 

The types of components:

• If you track a component’s quantity, set it up as an inventory part.
• If you use a component that you don’t (or can’t) track, set it up as a non-inventory part.
• If you include other charges or fees in each build, set them up as other charge items.

You will need to use a service item for this component. A service item is used for a service you provide to a customer. You can create services that are charged by the job or by the hour. I've included some steps to add a service item below. 

1. Go to Lists,  then select Item List.
2. On the Item List window, choose Item then New.
3. Click on Service Item as the type. 
4. Key in the name (such as Labor for job 23).
5. Be sure to check off the This service is used in assemblies or is performed by a subcontractor or partner box. 
6. Add your rate and the account. 
   • 

Once you've added your new service item, it's time to include it in your assembly. Or you can just add an extra line to your invoice. Let me walk you through the steps. 

1. Open your assembly item by right-clicking it and choose Edit. 
2. In the edit screen under the Bill of Materials section, add your new labor service item and hit OK to save. 
   • 

That's all there is to it. I've included some great help articles below that will be resourceful in learning the process. 

• Add, edit, and delete items.
• Track the products you manufacture
• Combine your inventory items to build finished goods
• Set up your product's bill of materials

I hope that this information helps you out. Please let me know if you have further questions or concerns. I'm always around to lend a hand. Take care! 

Thanks Tori B, 

I followed you instructions (see attached) just wondering why the "Sell Price" didn't change

Hi Liftco,

Thanks for the update. Let me help you with the difference in the sales price.

You can run the Verify and Rebuild data utilities. These will check for data issues and fix them. We run these tools when figures on prices and or reports are not syncing within the different sections in QuickBooks.

If the sales price of the assembly doesn't change to 3,511.06, please contact our QuickBooks Support to check this further using more tools.

I'm just right here if you have any other questions regarding QuickBooks. Take care.

I'm curious what account did you use for the labor part number? 

Hi:

I have quickbooks premier contractor 2020 desktop.

i am a contractor and we are finishing basements.

I would like to use timesheets to record my workers time on each task and then record their labor cost as an inventory assembly.  At the end of the job, then we will record cost of sales vs job sales price.

Am i using the correct version of quickbooks?  Also how do i set this up?

I create Labor as an inventory item in our manufacturing business. For example, we have the following labor costs:
Assembly

Welding 

Fabrication

And others.  I've calculated our estimated cost of labor per hour; including paid employer costs but not overhead costs. ie: hourly wage + Employer paid FICA..example a $15/hour paid employee's labor cost might be $21/hour in our system.

We then have a labor production rate for each part/assembly/weldment we produce at 'X' hours and I enter that as an item in each part.

The nice thing about doing this is when we create payroll, each employee is assigned to the labor inventory item. Welders are assigned to Welding dollars, Fabricators to Fabricating dollars. So when payroll is issued, we deduct from the labor inventory. This allows me to track how efficient or correct I am regarding the estimated labor/part or assembly across the general inventory item. ie: If we have a negative inventory $, then I'm applying too much labor and can go back and review the products produced; if we have a positive inventory I'm not applying enough labor.

I don't get crazy with this... I usually evaluate quarterly. And if we are close within a few thousand, then I'm pretty happy. But, if at the end of the year or 6 months we are way off, then I dig in and figure out where we are off.

At the end of the year, I make a General Journal entry to apply all Labor Inventory + & - to our General COGS.

Hope that helps!