How to use quickbooks for inventory management in a manufacturing company.
Tracking inventory is one of the most important aspects of a business in the manufacturing sector. This is primarily due to the complex accounting requirements of businesses in the manufacturing sector. The complexity arises because of the parallel increase and decrease of items and value of components down the chain along with the necessity to include the overhead charges involved in the manufacturing process. This is where software like QuickBooks is useful with its powerful tools for handling inventory.
If you are small business, you do not have to worry about the unwritten rules of manufacturing where the value of labor and factory overheads are also included in the finished-good-item.
How to manage the manufactured inventory in a simple manner?
In the older versions of QuickBooks Premier (as well as QuickBooks Pro), there is no facility of create accounts for inventory of manufactured goods. The goods or items could be clubbed together into single items and presented in the invoice of the customer.
There is one problem in this type of grouping though. There is no way to track the inventory value of the finished goods.
If there is a need to account the manufacturing of inventory items in QuickBooks Enterprise or Premier editions, inventory assembly items can be added to the Item List. The items which are manufactured by the firm can be recorded as a collective item along with its individual components after the product is finalized.
For instance, your firm trades glass bottles along with other peripherals. But during the summer season, your firm also manufactures a student kit comprising of glass bottles, lunch boxes, napkins and tissue papers. Well, here QuickBooks can record the group of full student kit which amalgamates all the component items together.
How to add inventory assembly items?
- In the List window, check for the Item List
- Select ‘New’ from the drop-down list, after clicking the Item button
- In the Type drop-down menu, select the Inventory Assembly
- Mention the account which can be utilized to track in case if the item is sold
- The description of the manufactured item needs to be stated
- Sales Price box must be entered with the cost that is to be charged
- Tax Code depicts if there is a sales tax cost involved for the manufactured product
- The Income Account can be used to track the income after the product is being sold
- Identify the component items along with the quantity
- Asset account cab be used to track the current inventory item’s value
- Build Point can be specified to make manufacture more items if the count goes below the specified value
- Set the On Hand and Total Value box to zero
- Enter the date and the details
How to manage multiple inventory locations?
The recent editions of QuickBooks Enterprise consist of a feature called as Advanced Inventory Tracking, which can assist in storing inventories at more than one location.
Here’s the path to reach at Advanced Inventory setting.
Edit –> Preferences –> Items and Inventory –> Company Preferences –> Advanced Inventory settings.
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