Quantity on Hand versus Quantity Needed for Assembly

sjangity · ‎May 23, 2020

Brand new to QB Premier and excited to start my online business shortly.

I am a little confused on how to reconcile the QOH that gets updated for a PO-Bill-AP workflow to the Qty I need for building my product assembly.

Suppose I buy Item X from a Vendor A at Price M. The item is a bulk purchase and comes with 300 sub-items when delivered. Each product type that I build uses only 1 of the 300 sub-items and the per-item cost should be reduced accordingly 16.90/300 (0.056/item), so theoretically I can build 300 products using this Item X.

So should QB be showing QOH for Item X as 300 or as 1? Secondly, what's the proper way to get the pricing right to get my product 'Bill of Materials' cost accurate (ie. I buy in bulk pack, but use only single items)?

Thank you!

Jovychris_A · ‎May 23, 2020

Thanks for posting to the Community, @sjangity.

QuickBooks should show X item QOH as 300 since you wanted to build 300 products using this item.

When you purchase this item as a bulk order, I'd suggest adding a unit of measurement so that it would appear on the PO as one bulk purchase and will reflect as 300 items in QOH items. It's like purchasing a dozen of eggs and recorded as 1 item in PO and saving it in QOH as 12 pieces.

Let me show you how when you record it in PO:

On the Purchase Order form, select Add New.
Enter the item name and click Add New under Unit of Measure.
Tick Count (each, box, case, dozen, etc.) and then click Next.
Tick Each (ea) and then click Next.
Enter unit Name "bulk order" and "bo" on the Abbreviation column, then enter 300 on the # of Ea column.
Hit Next.
On the Purchase drop-down, select bulk order and select each below Sales, then hit Next.
Enter the set name as bulk order and then click Finish.
Once done, enter the necessary details like Cost as "0.05633" to show it as 16.90/300 items. Enter the Income Account and make sure the On Hand quantity is 0 so that it will appear on the QOH column as 300. and then hit OK.

You can then Receive Inventory with Bill and Pay Bills to make the number of items appear on the QOH column.

That way, your inventory assembly items will be recorded seamlessly and accurately recorded as 300 in total.

Just in case you wanted to adjust the Sales Price of the item due to the customer's demand, you can follow these steps:

Go to the Lists menu and then select Item List.
Double-click the item name.
Type the price on the Sales Price field.
Click OK to save it.

Please let me know if you have more questions. I'll keep my notifications open. Have a great weekend!

View solution in original post

Jovychris_A · ‎May 23, 2020

Thanks for posting to the Community, @sjangity.

QuickBooks should show X item QOH as 300 since you wanted to build 300 products using this item.

When you purchase this item as a bulk order, I'd suggest adding a unit of measurement so that it would appear on the PO as one bulk purchase and will reflect as 300 items in QOH items. It's like purchasing a dozen of eggs and recorded as 1 item in PO and saving it in QOH as 12 pieces.

Let me show you how when you record it in PO:

On the Purchase Order form, select Add New.
Enter the item name and click Add New under Unit of Measure.
Tick Count (each, box, case, dozen, etc.) and then click Next.
Tick Each (ea) and then click Next.
Enter unit Name "bulk order" and "bo" on the Abbreviation column, then enter 300 on the # of Ea column.
Hit Next.
On the Purchase drop-down, select bulk order and select each below Sales, then hit Next.
Enter the set name as bulk order and then click Finish.
Once done, enter the necessary details like Cost as "0.05633" to show it as 16.90/300 items. Enter the Income Account and make sure the On Hand quantity is 0 so that it will appear on the QOH column as 300. and then hit OK.

You can then Receive Inventory with Bill and Pay Bills to make the number of items appear on the QOH column.

That way, your inventory assembly items will be recorded seamlessly and accurately recorded as 300 in total.

Just in case you wanted to adjust the Sales Price of the item due to the customer's demand, you can follow these steps:

Go to the Lists menu and then select Item List.
Double-click the item name.
Type the price on the Sales Price field.
Click OK to save it.

Please let me know if you have more questions. I'll keep my notifications open. Have a great weekend!

sjangity · ‎May 24, 2020

Thank you, that helped!

One final question is how to deal with 'buy-in yards', sell in 'sq.in'. The cap for sq. inches appears to be 10K (image below)? I buy material sometimes that's 20"x50yd, sometimes 30"x10yd, etc., but when I build my products the bill of materials will be expressed in sq.in.

Please see below.

CharleneMaeF · ‎May 24, 2020

Thanks for getting back to us, @sjangity.

I'm here to walk you through in building your products in QuickBooks.

We'll use the Unit of Measure (U/M) feature, which shows the quantities, prices, rates, and costs for an item.

If you haven't turned on this feature yet, then you can follow the steps below on how:

Go to the Edit menu, then select Preferences.
Choose Items & Inventory, then go to the Company Preferences tab.
In the Unit of Measure box, click the Enable button. This button will not be present if the feature is already enabled.
Select which unit of measure mode is right for your business.
If the Begin defining units of measure checkbox is selected, complete the wizard and then select Finish.
Click OK.

Then, you can start adding a unit measure of the set. Here's how:

Go to the Lists menu, then select U/M Set List.
From the U/M Set drop-down menu, select New.
On the Select a Unit of Measure Type page, select Area and then click Next.
On the page Select a Base Unit of Measure, choose Square inch (sqin) and then click Next.
Place a checkmark beside the square yard and then click Next.
On the Purchase drop-down menu, select square yard.
On the Sales drop-down arrow, select square inch, then click Next.
Set a name, then click Finish.

Note: After a Unit of Measure is added, it can no longer be deleted.

Once done, you can now create an item. I'll guide you how:

Go to the Lists menu, then select Item List.
From the Item drop-down menu, select New.
Select the type.
On the U/M Set Field, choose the unit of measure you created.
Fill in the necessary fields.
Once done, click OK.

Also, there are two units of measure modes in QuickBooks; Single U/M Per Item and Multiple U/M Per Item. The way to change a unit of measure depends on which of these modes is currently selected. To see which unit of measure mode is currently selected, we can follow these steps:

Go to the Edit menu, then click Preferences.
Select Items & Inventory, then go to the Company Preferences tab.
Check the Unit of Measure section.

To know more about the function of these modes, you can check out this article: When to use Single U/M per item or multiple U/M per item in QBDT.

Keep me posted if you have additional QuickBooks questions, sjangity. I'm always here to help.

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Quantity on Hand versus Quantity Needed for Assembly