I have been tracking tooling purchases as an expense. I would like to keep inventory of them within manager. this would also allow me to consume them in a production order if worn out and need replaced to show that additional expense for a specific production run.
Can this be done? When I created inventory items for them and made a purchase invoice they were added to inventory on hand and not going to my “tooling” expense account.
They are not normally consumed. I would just like to keep inventory with my raw materials inventory.
The only way I see to do this is just expense them in Manager io. I would have to maintain an excel file for tooling inventory or create a separate business in manager io to track tooling as inventory items
Can I track inventory of non inventory items in manager io?
From what I understand, you’re trying to classify an item as inventory and then later treat it as a non-inventory item, which creates confusion. It’s unclear what your exact intention is.
Generally, any item intended for gradual consumption should be categorized either as an inventory item or a fixed asset, depending on its nature and usage.
I recommend first determining the rate of consumption and then using Manager’s available tools to accurately reflect that consumption in your records.
In that case, the item should be treated as inventory. The main challenge appears to be how its usage leads to damage or loss in value. To address this, you’ll need to carefully assess and determine the appropriate costing method for expensing or writing off the damaged inventory.
Expense the item through an appropriate account, then transfer it to a production activity or item using a Production Order.
Apply absorption costing to allocate the expense more accurately.
If the value involved is relatively low, as you mentioned, using the Inventory Write-Offs module may be the most practical way to maintain accurate inventory quantity levels by writing off the damaged items.
Yes, utilizing a write-off is the most appropriate approach. Write-offs can also be used to adjust inventory balances to account for issues such as spoilage, theft, abnormal waste and other inventory discrepancies.
This is for CNC manufacturing business. Making small steel parts. USA company/taxes/rules. I am in a crash course of learning.
Trying to properly account for drill bits, carbide inserts, band saw blades, and other consumable tooling. From what I found these are usually just expensed when purchased.
I think they would be considered indirect material costs. The items do not go directly into the finished product. They are used to manufacture and disposed when damaged or worn. They would not be on a bill or material. They would not typically be on a production order in manager io. Adding them to a production order as needed after the work is done would work well, or using another inventory transaction. As long as I can stop treating them as an expense when purchased and put in inventory.
Hopefully this makes sense.
I think I understand how to do it in manager io now, as long as I am allowed to account for it that way.
This is correct for your jurisdiction. Personally, I believe all other options discussed in this thread are far more complex than necessary. Worse, treating them as either fixed assets or inventory would actually violate tax regulations in your jurisdiction.
All items mentioned are either small tools or consumable shop supplies. They would not qualify as fixed assets, based either on cost or service life. Nor can they be considered inventory items, because they are not held for sale or production. These items are of such small value they could be considered similar to nails purchased by a carpenter. No carpenter would try to account for nails, but would simply buy another box when running low.
Not everything can or should be tracked in a general accounting program. Some things must inevitably be monitored separately. And sometimes it is simply not worth the effort. In your case, it is not appropriate to try to account for drill bits or saw blades as specific, indirect material costs, because there is no valid way to determine how long they will last in your production environment. A bit might be good for 200 holes before needing to be sharpened or replaced. Or it might break when drilling the first hole. Likewise, a bandsaw blade can snap due to a single, accidental misalignment on a cut.
A more appropriate (and easier) method is to monitor stock levels at the issuing point (such as a tool room or even a supply shelf). A simple kanban system that takes into account procurement lead times should be sufficient. This can quickly be set up by looking up your recent purchasing history, evaluating the criticality of the tool or part (in other words, how many spares are you comfortable having on hand), and then adjusting your re-order trigger points as you notice surpluses or deficiencies. Don’t think is too old fashioned or simplistic. The kanban system was invented at Toyota, literally using colored cards. When the card appears in the bin or in front of a box on the shelf, it is time to re-order.
As for reflecting costs for such items in production, that could be appropriate at a general level. Here again, your purchasing history can be the guide, leading to a material overhead rate to be factored into production orders. That way, you capture a reasonable estimate of the indirect costs on any production run without bogging yourself down trying to account for individual drill bits or carbide inserts. There are no write-offs to enter. You just need a shop supervisor who will tell someone, “Hey, we’re always running out of 5/16” drill bits," or “I am tired of finding space in the tool room for dozens of band saw blades we never seem to use.”
I might setup a second business in manager and just put the items into inventory and take them out. No cost or purchase order. Just manual inventory adjustment with notes. Not related to the actual business activity. I have been using Excel but it is just a current count. No record of when updated.
Do as you wish, of course. But a second Manager business would be more work than either a spreadsheet or kanban system. Keep your focus on what is truly accounting versus what is shop floor management. You already have lots of “second systems.” I would bet your coffee room supplies are not in your accounting system. Nor parking passes, if you have them. Nor cleaning supplies. And you cannot currently manage vacation time in Manager in any straightforward way. See what I mean? A few colored cards on a storeroom shelf seems fairly trivial.
Also, realize nothing in Manager will allow you to factor in purchasing lead times or “comfort levels” for important tools, or worries about supply chain disruptions. Ultimately, only you or an experienced production manager can make such decisions. The kanban approach is a fast, intuitive way to incorporate that kind of thinking.