I have a question about 'Products & Services' functionality in QBO.
- My understanding of the intended functionality is...
Set up a Product and set the Quantity and Initial Cost.
QBO creates a stock assets entry for the calculated value.
Any time you create an Invoice - QBO creates a cost of sales entry for the number of items on the Invoice multiplied by the Initial Cost.
For companies that buy 'things' and sell those 'things' - e.g. buy 10x widgets at 1.00 ea and sell them at 2.00 ea. - this system makes sense.
- My issue is that I can't see how to make this work for a manufacturing company where products are made from goods and services from multiple suppliers and the 'Initial Cost' of a product represents the sum of maybe 5-10 invoices - which are already logged in QBO as expenses. This is essentially doubling the accounting of my manufacturing costs.
- As a simplified example...
The Initial Cost of 'My Product' is 10.00.
I calculated this from the fact that 5x suppliers all supply 2.00 worth of bits to make that 1x product - I know this because I have 5x invoices logged in QBO at 2.00 ea.
Therefore - set the value of Initial Cost of 'My Product' at 10.00.
I now have a Stock Asset entry for 10.00 and 5x Invoices from the suppliers that helped build 'My Product' totalling 10.00.
So far, so good.
But - when I generate an Invoice to sell 1x 'My Product' for 20.00 - QBO also generates a Cost Of Sale entry for 10.00 - i.e. the Initial Cost value that I entered.
So now I have manufacturing invoices entered from suppliers totalling 10.00 and a cost of sale entry for 10.00.
So - QBO now shows my manufacturing costs as 20.00 instead of 10.00.
I hope that's clear - can anyone give some help on how to work with this?
Thanks.
