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Manufacturing with WIP in QuickBooks®
A successful manufacturer knows not only the costs behind the finished product, but the drivers behind those costs. If your business is more than just a hobby, direct labor and production overhead simply cannot be overlooked.
It takes a basic understanding of Accounting 301, but you can set up a configuration and workflow to track the manufacturing process throughout as many stages of production as your company wishes to track. Obviously you will start with raw materials and then your budgeted conversion costs (overhead and direct labor) are built into your build assemblies.
Once the production cycle is complete, you have finished goods inventory at a cost that takes into account your conversion cost budgeting estimates. Actual conversion costs incurred can then be compared to your budgeted amounts to really nail down your ability to identify the true cost of your product.
That finished goods inventory can then be transferred at cost to merchandise inventory if you sell that product through your point of sale system.
Let us help you implement this system and workflow.
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