Showing results for 
Search instead for 
Did you mean: 
Level 1

Raw Materials and Inventory

My company makes daiper rash cream which is sold as several different products.


There is a jar of cream, tubes of cream, and gift packs which contain both.


The components to make the final product consists of jars, lids, labels, tubes, sponges and also labor which is outsourced to 2 different companies, and there is shipping between the companies.


I am struggling with how I account for all of this in Quickbooks Online Plus.


I have created a 'product' in my 'product and services' area for each of the raw materials needed to make the final products.  Is that correct?


Which Inventory Asset Account, Income Account and Expense account do I use for these Raw Materials?


Once the raw materials are sent out to the manufacturer to assemble them into the final product do I remove them from the inventory account


Do I then set up new items for the final products and which accounts are used for the final products?


Finally how do I account for the labor required to assemble and ship the product.


Any help on this would be invaluable - also if you suggest using other apps please let me know.


Thank you 


Paula D'Onofrio 

Swabbies Technologies Inc

Level 15

Raw Materials and Inventory

The best work around for this.
create an inventory item for the finished product
create a cash type bank account called WIP
create a vendor named inhouse

use inventory adjust, set the adjusting account to the WIP account and lower the qty of the items being used to make the end item

pay all bills associated with outside costs, and use the WIP account as the expense (reason) for the payment

When you have the finished end item on hand, find the total balance in the WIP account.  Use write checks, do not print this is data entry, select the inhouse vendor, select the inventory item, enter the qty and enter the full amount in the total cost block, save

the finished end item is not stocked with average cost per qty, and the WIP account is zero balance

Level 4

Raw Materials and Inventory

Hi there,  

It’s fine to make the material/components as single products and bundle them all together to track the costs as you sell.  

But have you tried taking a look at the QuickBooks Appstore for a solution? Since QuickBooks Online isn’t able to take your raw material and convert that into finished goods.   

That way you can find a tool that can help you get more control over your production operations and then simply track the costs in the third-party app and transfer them to QuickBooks to keep your finances together. 

Like Katana, Connecting Katana and QuickBooks Online keeps your orders synchronized in both systems. Prevent situations where figures in different software's do not match. Your whole team will benefit, and your accountant will love it. 

Need to get in touch?

Contact us