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accounting259
January 22, 2020
Question

Can I adjust an item with a new unit cost, having a wrong history cost average?

  • January 22, 2020
  • 3 replies
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3 replies

AddieC
AddieC
January 22, 2020

Hi there, 

 

Working with inventory is an important part of running a small business. Your inventory prices may fluctuate or change over time, and it's important that you can have the flexibility to change the price accordingly. I'd be happy to explain how you can do this in QuickBooks Online. 

 

Here's what you'll do: 

1. Click the Sales tab, then select Products/Services.

2. Click Edit next to your item.

3. Manually adjust the cost, then click Save and Close. 

 

That's all there is to it. Please keep in mind that this will affect sales transactions created on or after the time in which the cost was adjusted, and this won't impact any prior historical transactions. 

I hope this helps get your question answered. If you have any other questions, or if I've missed the mark on my response, please reach out to our tech support team for further assistance. 

Have a nice day. 

Fiat Lux - ASIA
Fiat Lux - ASIA
January 23, 2020

@accounting259 

Afaik, QBO is still using FIFO, not Average. You need to use an inventory management app to calculate the average cost and integrate it with your QBO.

K
KevinFoti
February 11, 2021

When you adjust the cost of the item, will the system automatically create an entry to the G/L?

 

If you have 1000 units at $1 each and you add .50 cents of labor to make the unit cost $1,50 wouldn't QB need to adjust for the additional $500 of cost.  DR BalSheet Inv $500 and CR ???  Again does it do this automatically?

Rebecca R
Rebecca R
February 11, 2021

Hi there Kevin,

 

I love that you're looking to better understand the money movement that takes place in QuickBooks Online. This makes doing your books just that much easier. Let me give you some more information on how the General Ledger report will reflect changes to the cost of inventory items.

 

If you're to navigate to the Products and Services tab of the Sales menu to adjust the cost of your item from $1.00 to $1.50, you won't notice a change in the General Ledger. It will remain at $1000, because QuickBooks thinks that the adjustment reflects the cost of the item going forward. If you were to restock this item you'd notice a difference in the General Ledeger. However, if you run the General Ledger report, and select the Amount that's associated with the Inventory Starting Value for that item, you'll be able to edit the Inventory Starting Value no.START. Simply make the manual adjustment to the Initial cost and hit Save and close. Then you'll see that the transaction hitting the General Ledger reflects the ajdusted cost and shows $1500. 
 

If you'd like to learn more about how QuickBooks handles inventory, check out this article: What is FIFO and how is it used for inventory cost accounting?

 

Let me know if you need further clarification and I'd be happy to oblige. Take care!

K
KevinFoti
February 12, 2021

Thanks Rebecca, While I do understand FIFO and how that relates to QB, I have another problem to propose.  I understand that QBOnline does not allow for a Bill Of Materials.  That said, if I have 1000 bottles at $2.00 ea. (which I hold in inventory....have already purchased).   Then I want to fill those bottles which will cost $1.00 to fill.  I now have 1000 Finished Goods with an invoice from the filler for $1000.  Now I need to add the cost of the bottles which is $2000 from the above example.  How do I accomplish this without a BOM.  Is there any way to transfer the $2000 of cost of the bottles to the Finished Good?

 

Let me know your thoughts or possible work around.

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