To summarize, my company is a farm that raises hogs, takes them to a butcher, pays the butcher to process them into retail cuts, and then has those retail cuts hauled to our end customers (grocery stores). Our customers do not buy hogs; they by individual retail cuts and are invoiced for individual retail cuts.
Therefore, we never take inventory – or have a need to take inventory – of the retail cuts. We do take inventory of the hogs as Inventory Assets. So I have three questions.
1. In QuickBooks Online, is there a way to set up an automatic deduction from the Inventory Asset (Hogs) account when I sell the cuts? I’m told that, in Desktop, I have to do it manually with a journal entry. That makes sense; will it be the same with Online?
2. Since I’m not selling inventory, is there really any point to putting expenses under cost of goods sold? It seems like COGS is only useful when you pair it with inventory items. The expenses I have direcctly attributable to the hog operation (we grow and sell other things as well), include feed, bedding, medicine, etc. Why not account for these as Expenses?
3. How to the QuickBooks features "Product Categories" and "Classes" play into all of this? Are they of any help?
At the end of the day, I would like to be able to look at each piece of my entire farming operation (in this case, pigs), and have QB calculate for me what my profit and loss if for a particular enterprise.