@qbteachmt@Rustler - Tips & Tutorials Since taking over this position I've felt that the shipping should be included in the COGS as well, and I've asked our accountant, he actually set it up the way we do it now??
So should it go like this....we have hundreds of items that we sell. When I enter a bill for lets say 3 different items from one vendor, should we be dividing the total shipping into the COGS price? We receive each item on a separate line, so if shipping was $20.00 for 3 different items and the item price is $5.00 each, the item COGS would be entered as $11.67 each? I get confused trying to create reports to make sure we are marking up shipping enough on customer invoices. We use the expense accounts COGS-Freight in when we receive inventory that we will stock, we use Delivery & Frt-Franchise Supplies when we ship outbound UPS & R & L, and use Postage for adding to our postage machine. We use Supplies-shipping when purchasing boxes & peanuts used for shipping. The we use income accounts UPS & Postage when billing our customers for shipping. How can I determine P & L on this??
The advice I have received is as follows.....Run P & L, drilldown on COGS-Freight in, divide the total of COGS-Freight in by the total number of items sold. That will give us the "average" COGS-Freight In for each item. But that is not going to include the cost of outbound shipping and supplies purchased to ship.
I just do not know if that is the correct way to look at this??
Then when I look at the average cost of an item it's not accurate because the COGS-Frt in is not included.