Re: Purchase parts/services same as sales?

["Chris Travers" <..hidden..>]

On 1/15/07, Keith Nybakke <..hidden..> wrote:
> >It seems like we need some way to distinguish between parts which are
> >available for purchase vs. those available for sale. A set of checkboxes
> >would do it. Is there one I'm not seeing?
>
>
> This is especially true for service businesses that create products
> from raw materials, such as custom ceramics, as just one example.

If you create custom products, those can be handled as assemblies.
But I am not happy with the way that assemblies are currently handled
and we will certainly need to revisit this issue :-)
> The purchased goods are almost exclusively raw materials purchased in
> bulk and they have very little relation to the value of the finished
> product.
>
> A link between purchased goods and sold goods is not needed in such a
> scenario. In fact, that kind of link gets in the way because it
> insists on managing inventory through sales orders when in fact
> inventory is almost always managed by a combination of minimum levels
> plus demand flow.

Actually, you need some sort of link because otherwise you can't
accurately handle your cost of goods sold.  I.e. when you purchase raw
materials and pay to have the product created, you have not incurred
expense for these things until the product is sold.  However, the cost
accounting of this sort of work is still fairly primitive and could
use some work.
> I am evaluating Ledger-smb for a short run custom production kind of
> business and even though we ship physical products, the business
> actually behaves more like a service business. Job-shop work flow
> accounting is what I think we need.

Look at assemblies.  Even if they are custom, maybe you can make it
work for you.  If not, pose questions to the list about what sort of
challenges you are facing.

> I'm using this thread as a jumping-in point to ask some questions
> about Ledger-smb for my business.

Hope this helps.

Chris Travers