Purchase Price and Inventory Cost

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Additionally, there could be non-purchase-price additions to inventory cost. See:

Allocating freight-in to the cost of inventory items when purchasing

When purchasing inventory items, freight-in represents the transportation cost associated with the delivery of goods from a supplier. For accounting purposes, the recipient adds this cost to the cost of the goods received. Let’s say you purchase an inventory item which has a $20 delivery fee. Rather than posting the $20 delivery fee to an expense account, you can add this cost to the cost of the inventory item. [image] By not entering anything into the Qty field of the second line item, the …

Manufacturing or assembling new inventory items

If you purchase raw materials to be used in the manufacture of finished goods, manufacturing orders can be used to record this process. Production orders allows you to record one or more raw material inventory items used to produce an item of finished goods. For example, manufacturing fruit juices requires fruits, bottles and lids purchased from suppliers as inventory items. These inventory items can be converted into finished products such as fruit juice bottles which are sold to customers. T…