Frequently Asked Questions
How can I manage the production of finished products using Bookkeeping?
Last Updated 7 years ago
Bill of materials is not supported in the Bookkeeping V4 applications and requires that you manage that separately.
The simplest method would be to use a spreadsheet to manage your bill of materials. In your spreadsheet you can have a column for the number of finished products produced, and then separate columns for each of the raw materials required to create a finished product. Then enter a formula in each of the raw materials columns to determine the quantity of the raw material based on the number of finished products. Have a separate section that lists the base cost of each raw material. Then on the second line for each raw material multiply the base cost by the quantity consumed. Finally you would have a column that sums all of the raw material costs to determine the cost of the finished products. Your spreadsheet might also include columns for things that are not inventoried such as labour that become part of the cost of the finished product. Once this is done you can simply enter the number of finished products produced and the spreadsheet will calculate all of the raw material quantities and values.
When you produce finished products, or on a periodic basis, you use the spreadsheet to do the calculations and then you enter inventory adjustments to reduce each of the raw materials by the quantity and value specified in the spreadsheet, and an inventory adjustment to increase the finished products inventory by the quantity and value specified.
Using this process the Bookkeeping program inventory levels are maintained accurately and the finished products values and quantities are also maintained correctly so that when you sell a finished product the program can calculate the cost of goods sold for you if you use the average cost of goods sold method or the manual cost of goods sold method.
The attached spreadsheet is one possible example of a Bill of Materials spreadsheet for a finished product. If you want to accomplish this all using an iOS device then you can use the Apple Numbers spreadsheet program that runs on the iPad and iPhone. This is purchased separately from Apple on the App Store.
The simplest method would be to use a spreadsheet to manage your bill of materials. In your spreadsheet you can have a column for the number of finished products produced, and then separate columns for each of the raw materials required to create a finished product. Then enter a formula in each of the raw materials columns to determine the quantity of the raw material based on the number of finished products. Have a separate section that lists the base cost of each raw material. Then on the second line for each raw material multiply the base cost by the quantity consumed. Finally you would have a column that sums all of the raw material costs to determine the cost of the finished products. Your spreadsheet might also include columns for things that are not inventoried such as labour that become part of the cost of the finished product. Once this is done you can simply enter the number of finished products produced and the spreadsheet will calculate all of the raw material quantities and values.
When you produce finished products, or on a periodic basis, you use the spreadsheet to do the calculations and then you enter inventory adjustments to reduce each of the raw materials by the quantity and value specified in the spreadsheet, and an inventory adjustment to increase the finished products inventory by the quantity and value specified.
Using this process the Bookkeeping program inventory levels are maintained accurately and the finished products values and quantities are also maintained correctly so that when you sell a finished product the program can calculate the cost of goods sold for you if you use the average cost of goods sold method or the manual cost of goods sold method.
The attached spreadsheet is one possible example of a Bill of Materials spreadsheet for a finished product. If you want to accomplish this all using an iOS device then you can use the Apple Numbers spreadsheet program that runs on the iPad and iPhone. This is purchased separately from Apple on the App Store.