I have some packaging expenses as a part of the manufacturing process. So boxes used for packaging and also polythene bags used before shipping of goods. I have a purchase invoice created for the purchase of those boxes and polythene bags and entered amounts in the expenses section of manager and paid for those goods (i.e. purchase invoice is closed). I need to capitalise on this. I have been trying to create journal entry and trying to figure out how to now capitalize on these costs.
These are not capital expenses in the usual sense of purchasing assets lasting a long time, generally to be used for the production of income. You can handle them in a number of ways.
One approach is to treat the boxes and bags as parts of the overall product. Handle them exactly like resistors or fabric or whatever else goes into your product. This is especially appropriate if the packaging is customized for the product.
The other approach is to treat them as expendables. You might create an expense account for shipping materials and not worry about which exact product they pertain to. This makes more sense if the boxes are generic and used for several different products, but either approach works.
Another variant is to treat the boxes and bags as inventory items in their own right and use Manager’s kit feature when you sell a product that uses them.
One approach is to treat the boxes and bags as parts of the overall product. Handle them exactly like resistors or fabric or whatever else goes into your product. This is especially appropriate if the packaging is customized for the product.
In the case above how would you enter data in manager.
I think you’ll need to wait until a bill of materials capability is added. @lubos has mentioned this is coming. I confess, I’m not sure what you should do at this point, as I don’t manufacture for inventory. My experience with what I described has all been with more complex ERP systems. In fact, we included some custom packaging components in our bills of material and some generic components as expendable supplies in a hybrid approach.
I suspect that with Manager’s current capabilities, you would have to treat all part purchases as expenses. I’m sure there must be someone on the forum who can give more insight.
@shruti, you can treat those boxes and polythene bags as inventory items. So you purchase them the same way as any other inventory item.
Then you can use Manufacturing orders tab to combine inventory items to create new inventory items which would be for sale.
Or you can use Inventory kits which will automatically manufacture required inventory items upon sale.
So it’s really about choosing whether manufacturing manually or manufacturing automatically is appropriate for your business. In both cases, you would still treat those boxes and bags as inventory items.