Question

Un-roasted and Roasted Inventory

Forum|Forum|4 years ago
January 9, 2022
3 replies
8 views

Hello! I have been struggling with accurately accounting for my un-roasted and roasted inventory, Hopefully someone has had the same issue or has some good ideas to work-around the difficulties.

We are an e-commerce coffee company that roasts on demand when orders come in. Therefore, all of our inventory is un-roasted coffee which I have set up as an inventory account.

However, we sell roasted coffee (which includes materials such as a 12oz bag, label and roasting costs). If I set up the finished product (roasted coffee in a bag with label) as a non-inventory to then record the sale, then anytime I apply the materials to the finished product, it recognizes the COGS immediately in the P&L. This does not work because we have initially purchased many bags and labels which results in a much larger loss than it should under accrual accounting.

Any help would be greatly appreciated!

QuickBooks Online

KimMcCPA

@lucas1234 ,

When recording the purchase of bags and labels, what units are you using for quantity?

If you want the per-unit cost to calculate for you, enter the quantity of bags or labels, make sure rate is zero, and then enter amount... the cost per unit will calculate. This is in the Item details section of the purchase transaction.

For example, if you bought 2,000 bags for $50, the per unit cost calculates as $0.025

Sipping an orange mocha in your honor, a super 2022 to you!

L

lucas1234Author

Hello Kim! And great choice in beverage!

If I consider the bags and labels as inventory using the per unit amount, then I would have to create a bundle product (coffee, bags, labels) in order to deplete that inventory. When doing that, in the sales receipt, QBO requires a sale price for each item. But given it is sold as one product, there are not different sales price per piece of the bundle.

If I consider the bags and labels as non-inventory, then I do not believe that QBO tracks the per unit prices.

Let me know if that helps clear up the question, and super 2022 to you as well!

KimMcCPA

@lucas1234 ,

More musings... because coffee... yum...

If roasted coffee is non-inventory (depletion of unroasted beans is tracked another way?) but packaging is inventory, getting the platform to do what you need may involve a separate zero-price line on the sales receipt, just for the packaging. Will that look a bit strange? Maybe! But QBO will allow a zero price, even when there's a positive COGS per unit.

You could play with what appears on the sales receipt, since it would have a quantity with a zero price:

something thought up by an accountant

Total items shipped:

something more clever

This line is for our Inventory Bot, so we have more time to roast!

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