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Entering raw materials / how to handle manufactured products?

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Michelle

16 Jan, 2016 02:13 AM

I saw an already answered FAQ regarding raw materials and stock created from raw materials, but I am still unclear on how to account for them. I am new to Easy Books and I am new to having to account for purchases of raw materials that then get made into goods that get sold. I was entering a transaction for purchasing the raw materials into the accounts as a Paid (out) from the bank account and as a "purchase" to a custom-created "materials" account in the expense category. But the expense is listed as a total purchase from a vendor, not each individual stock item (broken into price/unit). So how can I take that transaction and break it out into price per unit, and then assign the units to a stock item that I sell. As I re-read this, I realize it could be confusing. So I will provide a number based example.

Say I purchase 25 beads from a vendor at $2.50 and on the same receipt, I purchase 10 beads of a different type for $1.00.
I entered a $3.50 paid out from my bank account with an equal $3.50 purchase to my "Materials" expense account.
But now I want to break that inventory down even further and give an item number to the 25 beads and list them as $0.10 each and do the same thing for the 10 beads that I bought. Then I want to be able to assign 5 of each type of bead to Stock item "Bracelet A" and account for the stock that I had purchased. Then I want to be able to sell "Bracelet A" and have an accurate accounting of what it cost me in materials to make, plus my profit on the sale. Can I do that with Easy Books? If so, how would I do that? I realize that if I do that, it will probably result in far more transactions than necessary, but I would like to be able to account for my stock this way.

Thanks for any help or insight you can provide!

1. 1 Posted by Michelle on 16 Jan, 2016 02:27 AM

   

   Sorry, forgot to tell you what version I'm using! I'm using the Mac version 3.5.1.

   Thanks again!

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2. Support Staff 2 Posted by Admin on 18 Jan, 2016 01:13 PM

   

   Hi Michelle,

   The reason manufactured goods are a problem is that Easy Books tracks stock levels and value on a per-stock item basis. It doesn't know about manufactured products where stock items are combined into a new stock item.

   However, in your case I think you could define the stock products as follows:

   • Beads_T1
   • Beads_T2
   • Bracelet_A

   The stock levels for all could be zero initially.

   When adding a purchase, you can select Beads_T1 and add a split to add the Beads_T2 purchase in the same transaction. This will give you the correct stock Qty and valuation of your stock.

   When you sell the bracelet, there is initially zero qty but you would like maybe 2 bracelets to show as manufactured (as an example). To do this, before you enter any sales we could post adjustments to move the cost value over from beads to bracelet as follows:

   1. Edit the Beads_T1 stock details, changing the Qty to 15 (25 in stock - 2 bracelets * 5 beads each) and Value to $1.50 (2.50 / 25 = 0.10 each bead * 15 remaining in stock). When you save the details form, Easy Books posts an adjustment between the asset account and the cost of sales.

   2. Repeat for Beads_T2. Qty = 0, valuation = 0.

   3. Edit Bracelet_A stock details. Set the Qty to 2 and the valuation to the total cost value removed from the beads, in this case $2.00 (0.10 each bead * 10 beads * 2 bracelets). When you save the details, Easy Books posts an adjustment just as before, but this time increases the asset value. Note the overall asset value and cost of sales has not changed from what they were prior to step 1.

   Now when you sell a bracelet, you can select Bracelet_A and choose the Qty sold. If you have already filled in a default sales price for Bracelet_A you should find Easy Books completes the sales amount for you. When you save the sale, you should see an adjustment to devalue the stock of Bracelet_A.

   I would expect the stock reports to be affected because this isn't how Easy Books is designed to treat stock but I think it will solve your problem.

   I hope that helps,

   Mathew

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3. Admin closed this discussion on 05 Feb, 2016 08:59 AM.