QuickBooks Manufacturing Bill of Materials

Written by Charlie Russell

In my post on QuickBooks manufacturing basicsI discussed the essential nuts and bolts (sorry for the pun) of building assemblies in QuickBooks. Today I’ll talk about structuring your bills of material (BOM’s). A BOM is a simple thing, right? You want to build something, you just enter in the list of all the parts that you use, and there you are. On some levels that is correct, but if you are looking for inventory accuracy, accounting accuracy, and want to make your life easy, you need to give this some more thought.

QuickBooks is only a rudimentary manufacturing system, so I’ll start off by listing some of its limitations:

  • You can only add 100 different items to a BOM if you are using Premier. Enterprise is more flexible, you can add up to 500 different items.
  • Reporting based on BOM’s is very limited
  • Although you can create multiple-level assemblies (that is, a part in an assembly can itself be another assembly), a build will only work with a single level at a time.
  • Integrating non material items in a BOM can be tricky when it comes to costing.

In this article we’ll talk about basic structuring of the BOM – we’ll go into how to use various item types in a future article.

Working with Levels

How do you look at the item you are assembling? There are different ways of listing the parts in an assembly – either a flat listing that shows all of the parts, or a nestedlisting that shows the parts in a tree structure with subassemblies. Each has its advantages, each has its problems in QuickBooks.

Let’s look at a simple assembly, a computer that I’m putting together from components. I have a desktop box, two monitors (it’s a dual monitor system, fancy), and a keyboard. That desktop box itself has a case, motherboard, power supply and a video card (I’m greatly simplifying this for the sake of discussion).

If I have all these parts and I make the computer all at once, then I can make a flat BOM, like the following:

QuickBooks Bill of Material

This is simple to work with. I can print a listing to give to the assembler, and I can issue a single buildto create the item all at once. For simple assemblies, this works well and fits within the QuickBooks approach to manufacturing. There are some drawbacks, though, which become more apparent when the product becomes more complicated:

  • If you have a more complicated product you can run into the limitation of the number of items that are allowed in a BOM.
  • If you build in stages you have no indication of what those stages are. This BOM doesn’t show you that you need to build the desktop box by first assembling the case, power supply, motherboard and video card. You also can’t use this if are building a number of desktop boxes themselves to hold on your shelves, ready for final assembly into systems.

The alternate approach is to create subassembly items and make a nestedBOM. We’ll create a new inventory assembly item for the desktop box, and alter the desktop computer assembly appropriately. Here is the BOM for the desktop box (subassembly):

QuickBooks subassembly

Here is the changed BOM for the desktop computer – note that we have dropped some of the components and have added the desktop case as a subassembly:

QuickBooks high level assembly 

Now we have two assembly items – one for the desktop box, and one for the final assembled computer. There are a number of advantages to this approach:

  • You get around the limit on the number of lines in a BOM.
  • You can build the subassembly by itself so that you can stock it for replacement parts, or to hold some ready for the final assembly.
  • If you have several variations of the final product that use the same common subassembly you can make changes to that subassembly quite easily. In a simple example, let’s say that we have a number of variations of final assembled desktop computer. Some have two monitors, some have one. Some have a 17″ monitor, some have a 20″ monitor. Some use an ergonomic keyboard, some use an economy keyboard. All use the same desktop box as a starting point. If you use a flatBOM then you have to enter all of the components for the desktop box for each of your final assemblies, rather than just adding the one subassembly component. If you have to make a change to that desktop box – such as changing to a different type of video card, you would have to make the change in each final assembly if you use a flat BOM, where you only have to make one change if you use the nested BOM.
  • Your printed BOM more closely mimics the assembly process – you have one BOM for the desktop box, you have another BOM for the final assembled computer.

However, there are trade-offs. Your manufacturing process in QuickBooks is more complicated, your QuickBooks reports don’t show you as much information as you had before.

  • If you want to build an assembled computer you now have a two step process instead of one. You must first issue a buildfor the desktop box subassembly. When that is done, you then have to issue a buildfor the assembled computer. QuickBooks won’t issue a multiple level build– that is, you can’t issue the build for the top level assembly and have it take care of all the parts of the subassemblies.
  • There is no way in QuickBooks to print a complete BOM of the top level assembly including the parts of the subassembly. You can only print a single level BOM.
  • When you look at the top level assembly in the build assemblywindow, which tells you if you can build the required quantity of the assembly, you don’t have a way of seeing if you have any shortages of the lowest level parts in the subassembly. You can’t see if you can build this item. You first have to look at the subassembly, then at the top level assembly.

These limitations make it difficult to work with multiple level BOM’s in QuickBooks. If you have a simple product, or a limited number of products, you might be better off working with flatBOM’s. If your products are more complex, though, that might not be an option. With complicated products you need the ability to print a BOM for a subassembly, and you may need the ability to manufacture quantities of the subassembly separate from the final assembly itself. If you often have changes to the composition of your subassemblies you will find it hard to achieve accuracy if you have to go through all of your assemblies to make a change, rather than just editing the common subassembly one time.

Working with nestedBOM’s in QuickBooks can be done, you just need to pay close attention to the order in which you are building assemblies, and keep careful records of your assembly listings.

Working with 3rd Party Programs

If you are working with complicated products and need to maintain multiple level BOM’s then you may find it worthwhile to work with one of several 3rdparty add-on programs that work with QuickBooks. At this time we won’t go into a detailed description of those that are available – you can find information on them in the QuickBooks Solutions Marketplace. These 3rd party programs fall into a few broad categories:

  • Inventory replacements: Some programs, like Fishbowl Inventory, maintain a complete inventory system outsideof QuickBooks. This gives the product more flexibility in how inventory can be managed, but can be more expensive and means that you have to manage a completely separate program and database.
  • Closely integrated: Another approach is to work with the inventory records in QuickBooks while generating reports and managing data in ways that QuickBooks doesn’t do, such as CCRQBOM. With this approach you do more of your work in QuickBooks where things are familiar, and you don’t have to manage a separate database. Often this approach is less expensive, but you still have to live with some of the restrictions in QuickBooks.

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About the author

Charlie Russell

Charlie Russell has been involved with the small business software industry since the mid 70's, and remembers releasing his first commercial accounting software product when you had an 8-bit microcomputer with one 8 inch floppy disk drive. He has a special interest in inventory and manufacturing software for small businesses. Charlie is a Certified Advanced QuickBooks ProAdvisor with additional certifications for QuickBooks Online and QuickBooks Enterprise, as well as being a Xero Certified Partner. Charlie started blogging about QuickBooks in 2008 (Practical QuickBooks) and has been the managing editor and primary writer for the Accountex Report (formerly the Sleeter Report) since 2011. Charlie can be reached at [email protected]

Visit his CCRSoftware web site for information about his QuickBooks add-on products. He is also the author of the California Wildflower Hikes blog.


  • I am trying to apply QuickBooks manufacturing and inventory to a food processing business. I can make up a BOM but as often happens with food, you can make the same recipe twice and have different yields. I have been through your tutorials and articles about manufacturing but I am left with how to make sure the correct amount of ingredients are removed from inventory when making a batch which will sometimes yield 52 bottles and sometimes 58.
    Any advice?

  • Varada, QuickBooks is not set up for variable yield. THe short answer is that if you are primarily interested in handling the variable number of items created, just issue the job for the expected amount and then do a “value adjustment” in the inventory adjustment window to correct the balance, leaving the total value the same. If you expect to make 52 bottles, issue the build for 52 bottles. If you end up with 58 bottls, look at the total value on hand, and total quantity on hand, then increase the quantity on hand to be 8 higher, but with the same total value.

  • Charlie,
    You are the QB Guru!
    Above you say “Your printed BOM more closely mimics the assembly process – you have one BOM for the desktop box, you have another BOM for the final assembled computer”
    How can I print an assembly that has another assembly, so another BOM within it.That will print everything i need to assemble the complete assembly. Showing me everything I need to make the entire assembly.
    For example:
    I have an assembly for a cabinet that has a drawer in it.
    So i have what is needed for the Cabinet in the assembly, then i have the assembly for the drawer, the drawer slides, screws and so on, as a sub assembly in the cabinet assembly. I need to print a BOM for the cabinet assembly that will include the box’s assembly parts and the drawer parts, all in one BOM print out!
    I’m using 2013 Enterprise Solutions Contractor editon.(I havent found a way to do it in the contractor edition, is there a way in the manufacturing edition?!)
    Thanks for your help!

    • Russell, you are talking about a multiple level BOM. As I point out in the article, QuickBooks (any version) doesn’t handle that well as far as printing or building assemblies. It only works at a single level. There are manufacturing add-on products that can help.

      The simplest one to use (which will work with the Contractor as well as the Manufacturing editions) is CCRQBOM, which can print a full level BOM for you based on your QuickBooks item list. Note that this is a product that my own company produces. See it at http://www.ccrsoftware.com/CCRQBOM/CCRQBOM.htm

  • I have a client with a jewelry business. They do custom designs and would like to keep track of that in their QuickBooks. Any suggestions on whether it should be an assembly, group, or build?

    Thank you,

  • We have a manufaturing tiles company. How I can introduce the monthly production?…Do I have to made a Production order?..

  • Hi!
    I am a new startup and I started with quickbooks online. I have to start to do the configuration of the bill of materials etc. but I can’t find where to put it. Do you know where I can find it, do you have a manual for this
    KInd Regards


    • QuickBooks Online doesn’t provide an “inventory assembly” item, so you have no way to enter a bill of materials. With QBO you have to look at a manufacturing add-on product to handle that chore.

  • I am trying to print a report that would show all single level bill of materials and list all of it’s components. So item #420-3046-03 is a 3ft air/coolant line. Next it would list 410-3042, 410-3257,260-3391 which are the components used to complete the air/coolant line. I am trying to print a reference guide for the people building the units to be able to look up the item # and see all of the items used to complete the part. Is there any way to do this in QuickBooks?

    • Chris, if you edit the assembly item, you should see a “Print” button to the right. That prints a single level BOM. Unfortunately you cannot edit the format, so it includes cost information, which many people don’t like.

      Alternately, you can use an addon product to do this with greater control. My own company, CCRSoftware, produces CCRQBOM. This can be used to print a BOM and you can edit the template. See it at http://ccrsoftware.com/CCRQBOM/CCRQBOM.htm

      • Yes I have been able to do this. What I am trying to do now would be to print multiple BOM all at once listing components in a report type format more like a book. The assembler would be able to look up the assembly they are making from the report which would print the assembly part numbers in order and then list the components. I have one that was made by a previous employee in 2009. The cost information does not matter.

  • Hi Charlie, been searching on the Internet for an answer for the past two days. I hope u still offering your services coz your last blog was in dec 2014. I so hope you are. I’m at my ends wits….

    • Sharon, I’m still writing, and if you click on the “authors” link above, and then on my list of posts, you’ll see that I’ve posted 25 articles so far just this year…

      You didn’t ask a question, so there isn’t anything to answer…

      • Oh great…I’m so glad. I should have asked you straight off. Anyway. Here goes.
        I’m running a restaurant and bar and have just purchased quick books enterprise. I’m setting up items I sell, and seem to be stuck on the following:
        I purchase mince meat in 1kg bags. With the 1kg I make either 30meatballs or 50 Samoosas. And sell. So I’m getting confused as how to best set this up as I track the inventory of each item closely. Thank you in advance.

        • Sharon, it is hard to give a really good answer via blog comments, particularly since there is so much about your business process and needs that I don’t know about.

          In a very general sense, when I look at a business that is doing the kind of thing I think you are doing, the first question is “do you really need to control things in that much detail?” You have waste and scrap issues, variability of different kinds, and that makes it hard to track inventory of your mince meat closely. And, the “cost” of doing all the work to closely maintain inventory levels of mince meat may well exceed any savings you get, particularly if that mince meat component isn’t really expensive. I often recommend that you don’t try to use inventory assemblies to track that kind of process in that situation, rather that you use either a periodic inventory count or some other method of tracking that is similar. I’m guessing that all of these items move through the business fast, so “inventory parts” may not be the best approach.

          If you do have some reason where you really need to track the movement of items through inventory, then QuickBooks isn’t going to make it easy for you. A Bill of Material is set up to create “1” of something. So if you are tracking the quantity of meatballs you have (again, that seems overkill to me), you need to create a BOM (recipe) for one meatball. It takes 0.0333 of a kilogram of mince meat. That then introduces another issue, as you have some rounding errors. If you make 30 meatballs that consumes 0.999 of a kilogram…

          Alternately, you make the BOM use 1 KG of mince meat (which makes a really, really big meatball, I guess), and then when you build the assembly to build that one meatball you do an inventory quantity/value adjustment to change the quantity on hand +29 while keeping the value on hand the same. You have to do that for each build.

          It adds a lot of work to track things in that environment, and unless these are really expensive meatballs you may find that the extra work isn’t worth the cost in time and effort. Again, I don’t know your situation in detail, so I’m just making generalizations.

          • Dear Charlie, thank you for your indepth explaination. it was most helpful. you are very right in that i cannot use QB to track the food item inventory. its far too tidious and definately overkill.
            If someone has the same question, this is what i’ve done. i have opted to create the meatball item as a service in order to make the sale and the mince meat item as a non inventory part. This way QB recognises a purchase of mince and recognises the sale of a meatball.
            and as it is important for my business to track every single meatball sold and every since transfer of the mincemeat- good old excel will suffice.
            thank you again for your input

          • You can make the meatball a non-inventory item as well, just for classification purposes on QB reports – works the same as being a service item if you set it up right. If you need to track the quantity of meatballs, you can make them an inventory part and do adjustments. Or you can make it an inventory part but keep the mincemeat as a non-inventory part, so you don’t get into rounding issues on quantities.

  • I have a question about a Bill of Materials. Can you remove columns? For instance I want to print out the BOM but don’t want the prices included. I want to print it to put into a binder with an assembly guide for a machine but don’t want my employees seeing all the financials. Can you do that?

  • Hi Charlie, should labor costs be included in the BOM or just the raw material? My accountant assigned a labor cost based on time to complete an assembly, will this not dictate an incorrect total? Also when completing the BOM the total is manually entered into the ‘Cost’ cell, what does this cost cell do? Thanks!

    • I’m not sure what exactly you are looking for, but you probably can’t do what you want. That is, you have to have the items on hand before you can build the assembly. Or are you looking for something else?

  • Let’s take into consideration the example you have with the computers. We shipped a computer to the customer, but we were out of video card. I want to create a back order for the video card. What is the best way to do it?

    • Was the “computer” an assembly that you built? Or a group item? If it was an assembly, and it was an “inventory part”, and you didn’t have it, you couldn’t build it. If it was a non-inventory part then you could.

      The “build” process doesn’t have a backorder feature, and invoices won’t let you show the components of the BOM. Backorders are traced through sales orders and invoices in QuickBooks, using inventory parts. You could add the inventory part to the sales order, then create the invoice but say you don’t have it. That will show on the invoice, and show as an item in sales orders that is waiting to be fulfilled. No affect on quantity on hand or your accounts yet. Then when you get the item you can remove it from the sales order and send to the customer. You don’t want to INVOICE it, even at a zero cost, because it should have been taken care of in the “build”. Of course, as I said, if you didn’t have it on hand in the first place you couldn’t have issued a build….

  • Charlie,

    I just want to make sure I am getting this right. Let’s say I set up all BOMs that I will be using. If a customer orders a computer and I am out of a video card, I will not be able to create a SO using a BOM since I am out of the video card? Correct? Is there a way of working around it? Like adjusting negative quantity on hand for a video card, so I am able to build a BOM. And then creating another sales order for a video card (backorder) under the same customer and then close the sales order once a backordered video card is shipped.

    • You can create a SALES ORDER, but you cannot BUILD the assembly item if you don’t have the parts. And on an INVOICE you certainly can sell something you don’t have, but that would create a negative inventory situation, and I don’t like to see people allowing that to happen (lots of things wrong with negative inventory, as we’ve written about). So go ahead and add the item to the sales order, and that will make it show up on your inventory reports as “on sales order”. A “backorder” in QuickBooks only happens if you invoice the sales order and keep that item off the invoice.

      • Charlie,

        We have inventory items that we rent or loan to customers. Do you have any articles pertaining of how to handle rental items? Also, we have a rent-to-own program. Customers ask for monthly statements. I was wondering if there is an option in QB to send monthly invoices to the customers? We use QB Enterprise. I appreciate any help.

        • I don’t have any articles on rental businesses and how to use QuickBooks. I don’t work with those kinds of businesses myself. If you don’t need to track who has things, you can just bill them. Unfortunately, QuickBooks always calculates rateXquantity=amount, so you can’t get something like rateXquantityXdays=amount, unless you look at a product like CCRQInvoice. If you want to track who has what items, you can play around with Sales Orders to hold the quantities of items, perhaps. Not clean.

          For recurring billing you can use the “memorized transaction” feature to create memorized transactions, but I’m not a fan of that. Or go to http://www.q2q.us and look for their recurring billing add-on .

  • charlie u did well i like it ,sir i have questions how to enter direct labor cost in BOM if we pay him wages on weekly basis or Monthly basis how handle this

  • Thank you for all the information over the years. I do have a question related to this topic that I’m hopeful you can help with. Can the default columns in a BOM full view (from inventory center) be customized? I would like to print my BOM’s but also want to include a vendor column in the export. Currently the only way I have found to print a BOM is to use the print to file option from the assembly item screen but it appears there is no option to edit the columns to change the information exported. Thanks for any help. I use QB manufacturing edition 2016

    • You can’t modify that report, as you have found. No way around that from within QB itself.

      You can add the “preferred vendor” field to a report printed with an addon product, though. One would be QQube, which I’ve reviewed in this blog (some years ago, but the review is still valid). Great data extraction product, although it takes a bit of work to understand fully, and it isn’t cheap. My favorite general reporting tool for QB Desktop. Another product that can be used to help here is CCRQBOM, which is lower cost and specific to manufacturing issues. You can find it at http://ccrsoftware.com/CCRQBOM/CCRQBOM.htm. Please note that my company (CCRSoftware) created this product, so I do have a bit of a bias here.

  • Thank you very much for your advise on this!

    I ended up adding a custom field called “vendor” to all my items/parts in inventory center. (Double click item, select custom fields, add a new field called “vendor”. I entered the vendor name for each item in the new custom vendor field. In the build assembly screen I edited the columns displayed to include this new field but its not necessary here. Save a “pending build” for a QTY of at least 1. Then from the top menu….(still from the build assembly screen) select….reports….then transaction journal. From this screen you can customize the report to include the new custom vendor field created above. You can delete the pending build after you have exported what you need. For the life of me I cannot figure out why QB will not allow the reports to pull from the current preferred vendor field. Hope this helps others out there.

    • Interesting approach. Lots of steps, and I’m not thrilled about creating a transaction just to get a report, then deleting it. Lots of junk in the audit trail then. Messy approach. But you do what you have to do to get around the limitations of the program, right?

      It is always interesting to note how limited the reporting capabilities are relating to inventory features in QuickBooks desktop.

  • Charlie,
    We converted many items into assemblies and build BOMs for each one after our inventory count on May 31, 2016. We just realized that changing the cost in the BOMs affected all data retroactively in our Inventory Asset account. Do you know why it is happening and how to stop this since we are planning to convert more items into assemblies?

    • Just changing an inventory part item into an inventory assembly item won’t change the cost. What exactly did you do to change “cost”? Inventory adjustment, or what? Or were those original parts a different item type than “inventory part”?

  • Here is one of the examples. We sell discs that were set as inventory items in QB. However, they were never capturing the cost of screen printed service that was provided by one of our vendors. So, we changed all discs into assemblies and built a BOM including the blank disc and screen printing service. After that we discovered that it affected our 2015 data.

    • When you say “inventory item”, were they “non-inventory part” items, or “inventory part” items? Simply changing an “inventory part” item to an “inventory assembly” item will not have any effect on costing or affect any prior transactions using those items. Changing a “non-inventory part” item over could, because there are significant differences in how these items are used in the accounting system.

      Building an assembly by itself, without doing some associated inventory adjustments of some sort, won’t affect anything that is dated prior to the date of the assembly build. No effect on 2015 data unless you entered a 2015 date for the assembly builds.

  • Hi Charlie,

    I have a question on assemblies. We are a packaging company that designs custom packaging needs. I was considering using QuickBooks Mfg & Wholesale to track the custom items that we make. I am struggling with figuring out how to set up assemblies. For example, we will bring in a sheet of Foam measuring 108″ x 48″ x 3″. Depending on the design, we can get various die cuts out of a single sheet. For one product we may get a yield of 10 pieces from a sheet and on another 20 pieces. I was getting confused with the units of measure, etc. when trying to figure this out. Maybe Quickbooks just won’t work for this? Thanks in advance.

    • QuickBooks isn’t set up for this kind of situation, although you can use it. I can’t give you specific advice because there are a number of variables depending on your situation.

      Variable yield is a problem no matter what software you use. If the foam sheet is a low cost item, I would consider making it a non-inventory part so that you aren’t really counting the quantity on hand. That might not work for your situation, but it is a consideration.

      Go to https://www.sleeter.com/blog/tag/quickbooks-manufacturing/ and look over the articles. There are a couple that talk about handling custom manufacturing that might be helpful to you.

  • I have a question. To give you a little background, we make our products in many variations, including style, length & color. We have separate item #s for each. For instance, one set of style/length grouping will have item #s that each has the same beginning, but the last 2 numbers are the color code (i.e., 01 is white, 04 is linen, etc.). Each color takes a different “recipe” of raw materials that are not only different as far as the material used, but also in different ratios depending upon the color. But other items in the BOM for all items within one grouping uses the same item/quantities regardless of color — such as boxes. So it ends up that we have hundreds of active items #s for what we manufacture. They are complicated, and we’re a very small company (I’m the only office person). We know there are mistakes made by people who created them and are no longer here. We want to go through them and cross reference items from one length to another in the same style/color to make sure they are right and find those odd-ball mistakes or incorrect quantities. But we don’t want to have to either look at them on the screen one at a time or print them all out.

    So my question is can we download all assembly BOM’s as a batch into Excel so we can manipulate and compare them easily? And after doing so, is there a quicker/easier way to make necessary changes besides opening each item one at a time? I’m hoping there’s a way similar to the “Add/Edit Multiple List Entries” function that I can use on BOMs to verify correct quantities and/or make changes.

    • You can export your item list, with BOM, using the IIF export function in your utilities menu. But that is a bit hard to work with, and importing back from that list is not a good idea. You can look at utilities from Big Red Consulting (http://bigredconsulting.com/) that may be helpful, or better yet look at Baystate Consulting utilities (http://www.baystateconsulting.com/), which usually is what I would work with (both companies have good products). Extracting the data can be done with these products, importing updates back in might not be feasible.

  • Hi Mr. Russell,

    This has been the most informative article I have found thus far! However I am beyond confused on the inventory portion of quickbooks enterprise.

    We are a new food manufacturing company. We manufacture 3 items total.

    All three have different recipes and are manufactured on different days. Therefore they would all have different item assemblies. However, we use measurements such as tbsp and cups and such. I am just getting stuck on how to configure little things like spices and chicken because we have VERY little ingredients on hand. We order ingredients on a Monday to be used the entire week, and by the following Monday we order more ingredients. However, the amount of products we produce are on hand and sitting for customer orders. I feel as if that is more vital to keep track of. Whereas the “material/ingredients” portion is going to be agonizing and tedious to keep up with..

    I am really struggling because I do not understand how to best keep track of the inventory without it being too tedious. Does Quickbooks Enterprise Manufacturing equate to inventory for food manufacturers?

    My overall goal is to accurately keep track of Inventory of our completed products, COGS, and linking customers’ purchase orders against our inventory on hand.

    I would really appreciate your help!!

    Thanks in advance.

    • I can’t give you specific recommendations in blog comments, as there are a lot more things that I would need to know about your business. You should consider working with a ProAdvisor who understands manufacturing and your industry, to get specific help.

      QuickBooks isn’t, for a variety of reasons, a great fit for most food manufacturers. There are products aimed at this industry, I don’t have recommendations as I don’t work in that industry directly. These products are NOT cheap.

      In a very general sense, I tend to recommend that this kind of business consider not using a BOM to manage details like small amounts of spices that go into a product, unless these components need to be managed very closely. If they are very expensive, hard to get, then maybe. But there tends to be a number of factors that makes it a LOT of work trying to manage those components. And for things like “chicken”, where you have “catch weight” issues and variable yield, QB is really tough. Variable consumption, variable yield, very short shelf life, it is a lot of work to track. However, in some cases, you might need to do that.

      And don’t get me started on lot tracking, something that Enterprise only addresses very roughly. You don’t have the kind of lot tracking features in Enterprise that most food producers really need.

      • Thanks for the quick response! It makes me feel better that this is a hard category and such, especially for the field I am trying to work with. I think that BOM is also a waste of time with such variable materials. So with that being said, would you recommend classifying the inventory as just a generic COGS Inventory? I am just getting hung up on determining if I need to classify as WIP Raw Materials and somehow transfer that into the Inventory Asset once the units are produced, OR just forget it all together and just classify the ingredients as COGS Inventory like stated above. The only problem with that is that I would not have “completed inventory products” on hand to sell.

        I am going to look into a ProAdvisor, because with one question many more come to the surface!

        • Margaret, there are so many issues here for a business like yours, that I can’t make general statements in blog comments. It really depends on issues like what the valuation is for component items on hand, how long items stay in inventory, and much more. And a lot of the issues circle around issues that should be dealt with your accountant, as there are tax implications.

  • Hello Mr. Russell-
    How can I build an assembly that includes a component with a variable cost? We sell screen printed shirts. I buy the blank shirts from a vendor, and outsource the screen printing. I get a volume discount from my screen printer due to qty in the order. My BOM is a blank shirt and a screen print charge. I create a PO to the screen printer to receive the screen print “inventory” and then build the assembly. Right now we have one line item in the BOM as ARTWORK CHARGE and adjust the price on each PO to the screen printer. I would like to have the 4 pricing tiers each as an “inventory item” so my customer service can select Qty 1-25 or 26-99 or 100-500 or 500+ in the PO to the screen printer and it will auto populate the cost instead of them revising the price manually. The problem there is that the BOM would want to see one of the 4 listed and not a generic line item like we have now. In reality it’s a service or non inventory part, but either way the BOM would need to use 1 of 4 selections. Thanks for your help!

    • QuickBooks Premier isn’t set up to handle this situation. You can manually edit the BOM before you issue the build, which can be tedious, or you can handle this variability entirely outside of the BOM and build process by doing inventory adjustments or some other approach (there are several ways to deal with it, none are great). Or, if you upgrade to Enterprise, you have the ability to edit the components used in the BOM at the time you issue the build, which would be the best approach (but Enterprise is much more expensive).

      • Thanks for the speedy reply. The good news is I have Enterprise, so I’ll look into that as a possible solution. Thank you again for your insight!

  • So many excellent articles and sources of information!
    I am the controller for an engineered wood products manufacturer using QB Enterprise17. We use an outdated periodic inventory system and I’m researching implementation of a BoM; however, we have one significant setback that I’m sure is not unique to our product; material and measurement conversions.

    Our finished product uses linear feet (LF)of 2×4 lumber. We purchase this lumber (raw material) in packs of varying lengths and individual pieces. To use a BoM system, we would either have to convert these packs of lumber into LF or have finished goods (assemblies) pull fractions of a pack of lumber. The former of the two is obviously the best way since, as I mentioned, there are several different sizes and groupings and no way to determine which one we are using at any given time.

    A similar situation, for comparison sake, would be like Justin’s shirt operation above having inventory of different sizes of shirts. The BoM would just pull one size from inventory. All shirts would have to be inventoried as just plain “shirts”; not varying sizes. (Or manually adjust the BoM with each build). Difficult to know when inventory of a particular size is getting low without inventorying each size separately.

    If we accounted for all of our 2×4 raw material lumber in linear feet from the start of the transaction process (when purchasing), it would be a huge headache to trace any discrepancies since vendor invoices are not structured that way. We would also have to convert when performing physical counts, which could be done in a spreadsheet I suppose. Essentially the 2×4 lumber would only be counted in LF in our system; nowhere else in the manufacturing process. Like the shirt example above, we wouldn’t know when certain types and sizes were getting low if we didn’t inventory them for what they actually were. What if we needed to cut a 12 foot long piece but only had 8′ raw material pieces? We have plenty of LF per the books but not from the right sources.

    Another question while I’m here… We have 50 different variations of finished goods made from about 60 different WIP pieces from about 30 different raw materials. We produce, on average, about half of these different products on any given day. Is there a way to “build” a day’s production of several different products at once without having to do a build of each WIP (sub-assembly) then each finished product (assembly)? If not QB, can your CCRQBOM software perform this function? Fishbowl? Others?

    Sorry for such a long post. I hope my explanations and questions are understandable. Any advice or direction you can provide will be much appreciated.

    • Hard to answer really detailed questions in blog comments. And, it is best to not combine multiple questions in one comment thread.

      Best I can say is that QuickBooks really isn’t suited well for your kind of situation, for the reasons that you outline. Unless you are working with really rare kinds of materials, I generally don’t recommend that a business of your type work with assemblies, in QuickBooks. Doing physical counts (cycle counting) works best, usually. However, without sitting down with you and going through all the details, I can’t say what really is the best. When you deal with lumber, you have many kinds of issues. More than you list (scrap, for example).

    • Addressing your second question, it is hard to say what the right answer is, again. If you are set up with multiple level assemblies, and you are using QB Premier, then you can use a product like CCRQBOM to issue multiple level jobs. That can be workable. Multiple other add-on products (Fishbowl, MISys Mfg, others) can also do this, but cost more to purchase and implement. There also can be situations where moving up to QB Enterprise may be the solution. It issues multiple level builds, and it allows you to issue custom builds (modify the BOM at the time you issue the build), which may be helpful.

      You may want to sit down with a QB inventory expert to work out the best solution.

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