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Established Community Backer ***

raw materials are inventory by definition if you buy more...

raw materials are inventory by definition if you buy more than you use for that production run and stock the excess

labor is already expensed as payroll expense.  Seems silly to me to move a current expense which lowers taxable income to an asset (inventory) which will only be expensed when sold.

QBO does not do manufacturing, it requires a work around

Create a bank type account called WIP (work in progress)
create a dummy vendor called WIP-purchases

post the cost, either a purchase or inventory adjust, to the wip account
when the item is made and you know the qty produced

Purchase the inventory item from the dummy vendor, Select the WIP dummy bank account as the pay from source,  in item details select the item, enter the actual qty produced that pass QAQC checks and will be available for sale, and enter the full amount in the WIP bank account in the item total block, save

check the WIP account balance it MUST be zero

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