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How to Assign COGS When Buying in Bulk or for Multiple Jobs

By |2021-08-12T13:18:00-05:00August 11th, 2021|Comments Off on How to Assign COGS When Buying in Bulk or for Multiple Jobs
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Situation

In the service and contracting industries, many businesses buy bulk materials for stock independent of a specific job or they might enter one bill for multiple jobs. Because at the time of purchase the material is not associated with a particular customer or job, the transaction covering this material is typically treated as a Non-Inventory Item and not assigned to a specific customer or job.

Take the example of a company that installs HVAC equipment for commercial clients. The client creates and uses estimates for his jobs. He buys equipment for stock but not as part of inventory. On these (stock item) bills, he uses the Items tab and the correct corresponding Item for the equipment, but this Item is a Non-Inventory part and he doesn’t assign a customer in the Customer:Job column (because the customer is yet to be determined).

When this client bills his customer, usually with a Progress Billing, costs for the equipment component of the item don’t show up on any of the Job Costing reports.

Other items, where the customer is known, the purchase be ‘ costed’ to a specific job. These costs show up on the Job Costs reports. Other than posting the equipment to Inventory, are there any ways to get the equipment costs posted to his jobs? How can the right cost be included when it comes time for Progress or other billings?

Response

A good workaround is to create a special Journal Entry, in which transactions are entered at the time the specific item is created for the customer.

In the first line of the entry, set it up to credit the Cost of Goods Sold. On the second line of the entry, add the Customer’s name. Then, debit the Cost of Goods Sold without using the customer on this line of the entry.

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About the Author:

HVAC Electrical Plumbing Software

Aptora delivers a true All-In-One services software solution including CRM, accounting, payroll, inventory, vendors, sales, marketing, dispatch, flat rate pricing, and more. NO 3rd party plugins or integrations required. Created by contractors for contractors, we know what it takes to grow your services-based businesses.

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