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December 11, 2023
Question

Manufacturing a complicated box

  • December 11, 2023
  • 0 replies
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Version: Quickbooks Enterprise 24 Manufacturing and Wholesale Edition

 

SOLVED:  Use "Other Charge" to create a single item for each service and incorporate those costs on a per-item basis into your sub-assembly.

 

We purchase raw sheets of wood to our "Base box" (which is the foundation of a more complex machine).  Raw wood is sent out for precision CNC cutting, resulting in box pieces.  After that, we pay a talented carpenter to take box pieces, build the box, chamfer edges, hide the screw holes, seal it, etc.  After that, we paint it ourselves.  We then install various hardware on the bottom of this box and, now, finally, it is ready for serving in the main assembly in that more complex machine.

 

My current setup:

Main Machine

--> Base Box Sub-Assembly

Sub-assembly only includes the proportioned amount of raw wood per box, proportioned amount of paint and the installed hardware. 

 

I'm obviously missing all 3rd party service costs resulting in an "undervalued" components of our primary assembly. These costs are substantial—CNC and carpenter are more than the wood itself.  We currently have those services "blanket" categorized as COGS so on our overall company P&L is accurate; but if attempting to review the P&L or examine margin on a per-machine basis, it is obviously incorrect.

 

What's the best method to incorporate these 3rd party service costs without having to create inventory items to represent the different "states" as the box transitions into the "final product"?  I fear if I "manually" add them into the cost, it will "double account" for that in our company P&L because the services are already in COGS.  Hopefully this makes sense.

 

Thank you for any guidance!