Skip to main content
W
Wm_Shrewsbury
April 19, 2023
Question

COGS for an assembly item

  • April 19, 2023
  • 1 reply
  • 0 views

We use QB Premier 2020 (Manufacturing & Wholesale). 95% of our items have a correct COGS. A lot of them are Assemblies, and they have the correct COGS showing up in Profit & Loss by customer report. However, about a dozen of our assemblies, for some reason, show up with a higher COGS than we charge for them. We have not lowered the costs - they just show up this way. Turns out we have been reporting a lower P&L for the last 3 years than we actually have, so now we're going to have to send in revised tax reports to the IRS.

 

For instance, we have a harness that we make that costs us $35 to make, that we sell for $45 (to a retail customer), that shows that our COGS is -$105.00. When I click on the item, it shows the correct COGS, in both fields ("Total Bill of Materials" Cost and "Cost" fields). So, where is it pulling this number from and how do I get it to reset to the correct COGS ($35)? I have Admin access, but can't find anywhere that resets the COGS to what it actually costs us.

1 reply

MichelleBh
MichelleBh
April 20, 2023

When running a business, it's important to have an accurate COGS costs. Checking the report and items setup is an excellent place to start to figure out what's causing the problem. I appreciate you doing this, @Wm_Shrewsbury.

 

I'll help you reset the COGS in your QuickBooks Desktop Premier Manufacturing & Wholesale account to $35, which is the right amount. So, you can file the revised tax return, and your taxes will always be correct moving forward. 

 

It is conceivable to have a negative COGS if your number of returns exceeds your sales for a specific accounting period or if there is a correction on inflated expenses from a previous accounting period.

 

To reset your COGS cost, follow the steps below: 

 

  1. Go to the Lists and select Item List. 
  2. Find and double-click the assembly item. 
  3. Hit Edit Item beside Bills of Materials. 
  4. Reset the cost to $35 and hit OK. 

 

In addition, QuickBooks keeps track of the average cost of each item, so as you buy new stock, the average rate of each item may go up or down. This average cost on the day the assembly is built is used for each build, and it is almost hard to find this average cost in the past.

 

But if item X is used only in an assembly, you could use a buy report for that item, get the quantity used in the date range, and do the math to know how much item X costs.

 

Moreover, if you're unable to reset the costs, may I ask a screenshot on your assembly item? This way, I can further examine and provide another solution to help fix the issue as soon as possible. 

 

To learn more about inventory assemblies, check out these resources for your reference:

 

 

I'll be around here in the Community if you require additional information about inventories in QuickBooks. Happy to help you again. Keep safe always. 

W
Wm_ShrewsburyAuthor
April 20, 2023

Hi Michelle! First, thanks for assisting. When I follow the directions you gave me it doesn't change the outcome. Attached is an example of an Assembly Item (a harness, in this case).

 

When I click on "Edit Item" I see the screen below, which is allowing us to edit only the single item that is part of the BOM this product is composed of.

 

 

If I go to "Full View" instead, I get the screen below (full BOM) and of course editing an item brings me back to the screen above.

 

So, in this example, we should see a small profit of $4.50. Instead, when I run the Income by Customer Detail report we show a loss (-$65.92). Over the course of a year this adds up a LOT, especially when we make literally thousands of these for our customers.

 

So, our question, is how do we get QB to reset the COGS to the actual COGS so that our reports are correct?

 

Thanks again for looking into this.

Terms & ConditionsAccessibility statement