Print Friendly, PDF & Email

Inventory Unit of Measure

Often companies purchase an item and sell that item in smaller portions. You might purchase a 20’ piece of pipe and sell it by the foot. Unit of Measure (or UOM) allows you to easily buy in bulk and sell that item in smaller pieces. For example, you may have an item called “20’ Length of ¾” PVC Pipe” that you sell by the foot. Your item receipt will have a quantity of one. Since you sell it by the foot, the software will be entering twenty into inventory.

There is a list called “Unit of Measure List”. It is located under the Company menu, just above the current Inventory Adjustment menu option.

Users can create three types of UOM – Weight, Volume, and Length.

A Summary of Unit of Measure

Unit of Measure (UOM) allows you to buy in bulk and sell by the piece. You might purchase a 55-gallon drum of chemical and sell it by the gallon. You could also purchase pipe in ten-foot sections and sell it by the foot.

When you set up an item to use UOM, that item is considered a “Unit” when purchasing. It is considered a “Base Unit” when selling.

Consider a 10’ stick of copper pipe that costs $10.00. That stick is a Unit. When you sell that pipe by the foot, that 12” section is a Base Unit.

When you purchase the stick of copper, you enter a quantity of one (1) for each 10’ section you wish to purchase.

If you order a quantity of five (5) sticks of pipe, your purchase-related reports will indicate that you purchased five (5) items for a total cost of $50.00. Remember, these are Units.

Your inventory related reports will indicate that you have fifty (50) in stock and ready to sell. The Average Cost of that item is $1.00. Remember, these are Base Units.

If you sell five feet of pipe to your customer, you will enter a quantity of five (5) on your invoice. You will reduce inventory by five. You now have forty-five (45) in stock.

Your purchase-related reports show that you have bought five (5) items. Remember that this a Unit. Your sales-related reports show that you have sold five (5) of these items (Base Units). Your inventory related reports indicate that you have forty-five (45) left in stock. The value of your inventory is $45.00 (for this item).

Tip: You purchase “Units” and sell “Base Units”. This concept is also used by Intuit’s QuickBooks. We are using the same terminology to keep it simple and consistent.

Preference

In order to help keep the program simple, this feature is off by default. Go to Preferences | Items | Company. You will see a Use Unit of Measure checkbox.

Security

You must have security to see and use this feature. That security setting is located under Company | User List/Security. Double click the name of the employee and click Next. Go to Company | Unit of Measure Edit and Unit of Measure List.

Add a Unit of Measure

You can add a UOM from the Unit of Measure list. You may also add a UOM from the Inventory Item. There is an Add New at the top.

Fields Definitions

Type: Select from Weight, Volume, or Length. See below for further explanations of each.

Abbreviation: An abbreviation of the name field. This is needed where space is limited in the software.

Name: A descriptive name for the UOM. Example: 25lb Container R410a Sold by the Foot

Description: A good description of what the UOM is trying to do.

Multiplier: The label may say “Number of Units Bought” or “Length Per Unit Bought”. This is the number of units that come in the container. For example, A 250’ roll contains 250 units or feet of wire. If you buy it by the roll and sell it by the foot, you would enter 250.

Weight

Fields

  1. Name (50) Ex.: 25lb Container of R410A Refrigerant
  2. Description (250)
  3. Number of Pounds Purchased per Container? Ex.: 25
  4. Number of Pounds Sold? Ex.: 2

When the item is received, the quantity will be multiplied by the number of pounds purchased by the container.

Item Receipt Example: If the Qty field equals 2, then 50 will be added to inventory.

Invoice Example: If the Qty field equals 2, then you are selling two pounds of refrigerant.

Volume

Fields

  1. Name (50) Ex.: Coil Cleaner – 1 Gallon Container
  2. Description (250)
  3. Number of Gallons Purchased per Container? Ex.: 1
  4. Number of Ounces Sold? Ex.: 2

When the item is received, the quantity will be multiplied by the number of gallons purchased by the container.

Item Receipt Example: If the Qty field equals 1, then 128 will be added to inventory (128 ounces to a gallon).

Invoice Example: If the Qty field equals 2, then you are selling two ounces of coil cleaner.

Length

Fields

  1. Name (50) Ex.: 250’ Roll of 10/3 Wire
  2. Description (250)
  3. Feet Per Unit Bought? Ex.: 250
  4. Feet Per Unit Sold? Ex.: 1

When the item is received, the quantity will be multiplied by the number of pounds purchased by the container.

Item Receipt Example: If the Qty field equals 1, then 250 will be added to inventory.

Invoice Example: If the Qty field equals 2, then you are selling two feet of wire.

Add/Edit Inventory Form

There is a “Unit of Measure” selection. Select the appropriate UOM for that item.

Important Fields on the Inventory Part

When you select a UOM, two related fields are added to the item.

Est Purchase Unit Cost: This is the price paid for the entire item, such as a roll of wire or a container of refrigerant. This is known as a “Purchase Unit”. It is the entire item which will be broken down and sold in units (or components or pieces).

This cost will populate on purchase transactions (purchase orders, item receipts, bills, checks, and credit card charges).

Est Sales Unit Cost: This is the price paid for the individual item you are selling. This is known as a “Sales Unit”.

This cost will populate on sale transactions (estimates, invoices, sales, and credits) when the items type is not inventory or serialized and the special purchase box is selected on the item.

A/P Related Forms

The “Unit of Measure” selection is available all forms that allow the user to purchase parts and enter a quantity. This includes Purchase Order, Item Receipt, Bills, Vendor Credit, Check, Credit Card, and Credit Card Credit.

When you first turn on the UOM feature, the UOM selector will be found at the far right of the grid. You may wish to drag it to the right of the current Qty field.

A/R Related Forms

No changes were needed on the invoice, item lookup, or any other form that sell items.

Inventory Adjustments

No changes are needed on these forms. If you wish to add or remove the quantity on-hand, you would use the quantity you sell, not the quantity you purchase. Example: Consider the 250’ roll of wire example we have used. If you are missing 50’, enter -50. If you are missing the entire roll, enter 1.

Frequently Asked Questions

Q: We created a UOM to buy one stick of 20-foot copper pipe and sell it by the foot. The multiplier is 20. We have purchased eight (8) sticks. The software indicated that we have purchased 8, sold 12, and have 148 in stock. This make sit look like we have sold more than we have purchased. Why does it work this way?

A: When you purchase a quantity of eight (8) sections of 20-foot pipe, your YTD Purchases = 8. The 20-foot piece of pipe is commonly referred to as a Base Unit.

We don’t feel that it is correct for Total Office Manager to indicate that the company purchased 160 feet of pipe. The supplier’s invoice would show that you purchased a quantity of 8. Your bill will (and should) show that you purchased a quantity of 8. The company took receipt of eight items.

Your UOM indicates that you wish to sell this 20-foot piece of pipe in “Units”. In this case, one “Base Unit” equals 20 “Units”. For that reason, Total Office Manager will add 160 “Units” to inventory.

If a user wishes for TOM to show a purchase quantity of 160, they should actually order 160 of those items.

Tips

  • This feature is really nothing more than a multiplier. It just multiplies the quantity by a value.
  • Unit of Measure only applies to Inventory Item types only.
  • If you sell an entire container of an item, such as a roll of wire, you will need a part number for that roll of wire. Entire containers need their own part numbers. Imagine that you sell a twelve-pack of pop and you also sell the cans individually. The package will have an item number and the individual cans will have a different item number.

Related Content