Many people see this assembly item type in their item list in QuickBooks but few realize how they actually work. Assembly items are generally used by Manufacturers or anyone that needs to put multiple parts together to sell a finished product. Let’s talk a little bit on how to set something like this up.
First, if you haven’t done so already, you need to turn on the preference that enables Inventory. To do this, go to Edit>Preferences>Items & Inventory>Company Preferences and check the box that says “Inventory and Purchase Orders are Active.” Click Ok. Now, when you go into your Item list, you will see that you have some new options of item type. One of which includes Inventory Assembly.
Every item that is a component of your finished product must be in the item list. Keep in mind that the components can be any type of item so be sure to include any labor time (service), extra costs (other charge), etc. The finished product will be the Assembly. Once you have all your individual component items setup in QuickBooks, then it’s time to create the Inventory Assembly item.
Go to the Item button at the bottom of the item list and choose new. In the item type box, choose Inventory Assembly. Create item by entering the finished product name, cost, COGS Account, Description, Sales price, Tax code and Income Account. Then you need to create your Bill of Materials. This is a listing of all the component items and quantities that make up this one assembly item. Choose each item and quantity in the Bill of Materials Box. Once you have everything entered, click ok.
Now you will see your Assembly item in your item list but the On Hand Quantity will be zero. Just like Inventory Items, just because you create the item in the list, it doesn’t mean that you have told the system how many you actually have. With assembly items, you actually have to go into a different screen to tell the system when it is time to actually build the finished product. To do this, go into Vendors>Inventory Activities>Build Assemblies. In this screen, you choose the finished product that you want to build. Down at the bottom right, QuickBooks will tell you how many you are able to build based on the on-hand quantities of the individual parts. In the box, enter in the amount of finished products you want to build and click Build & Close. Once you have done this, QuickBooks will pull out of inventory all the proper quantities of the individual parts and increase the quantity of the finished product based on how many you told it to build.