Help! Mfg. accounting-inventory/COGS chart of accounts

[Shaun @ Tru6]

I need help! while at one time I could craft up a simple chart of accounts and perform reasonably sound bookkeeping, a new women's apparel and merchandise company I am launching has me stumped.

We are creating: purses and apparel, so buying raw goods. Direct costs for one of the purses are:
Purse
Porcelain tile
Bead Chain
Connector
Freight in

others will have aluminum plates and rivets, others will be embroidered. See pic.

For a shirt
shirt
image transfer
transfer labor
freight in

I want to track down to the style of purse (3), color, artwork type (embroidered, tile, plate) etc.

I am using MYOB AccountEdge and slogging through setting up a ton of accounts but am not positive I am doing it correctly.

We will have Direct Materials and Finished Goods, there really won't be any work in process. Either it's done or it's not.

We will sell direct over the web and to boutiques.

Any help on the subject is much appreciated, and I can explain more about what we are doing too.

thanks

Shaun

[Tishabet]

I have NO idea what you're talking about Shaun, but those purses look really cool. Things are insane out my way, but we need to get lunch again, I'll see if I can roust some other cambridge pelicanites to come as well. I might even permit you to sit in the 944

[VaSteve]

Shaun,

It seems you are trying to be very specific. While I don't know that particular application (MYOB), couldn't you set up a couple of summary accounts to track direct materials and have subsidiary accounts to track all your seperate materials? Are you buying each item from a different vendor? Sounds like a back office nightmare? Then whatever mechanism (time cards, job tickets) you use to complete an item will move it to finished goods again with it's own summary account.

FWIW and for such a (presumably - based on your other threads) small operation, it sounds overly complex.

I'm kinda interested in what your trying to do. I might be able to serve as a sounding board, PM me.

Steve, CPA (only licensed in VA )

[RickM]

Nice product there.

Do we get a secret Pelican coupon code whe odering for our "significant others"?

[dtw]

Shaun,
I haven't worked with MYOB - but can't you keep actual account numbers to a minimum, but track RM on a part number basis under a couple of accounts, and track FG similarly under unique part numbers or SKUs? If you have unique account numbers for each distinct part, you're going to create an accounting nightmare once operations ramp up.

[Shaun @ Tru6]

Steve, sent you a PM. If you want to talk more, my email is shaun@g9girl.com.

A secret Pelican discount? How's 25% off retail sound? here are a few pages from our sales catalog, work in progress! Also, a pic from a recent photoshoot. We've got 19 styles of apparel (T's, tanks, shorts, hoodies, intimates) with 30 unique designs, 3 purses and stationary all pretty much ready to go in launching G9Girl.

All artwork is from acrylic paintings done by my partner.

let me know what you think.

[RickM]

Very nice. I will definitely show this to my daughter. Although she's only seven she digs this type of thing.

[Shaun @ Tru6]

Dave, here is where I am at. Does this look right? I am a true analysis freak, so I want to report down to the last detail. MYOB does have a "build a finished good" module with an auto-build feature, so that should help. I still don't know how to treat Freight In regarding Raw Materials, and guess that it goes into the Finished Goods total, then translated to COGS sold on a sale.

Thanks so much for your help.

Inventory Accounts


COGS Accounts


Sales Accounts

[VaSteve]

Shaun,
You have another PM in response (in case you didn't see it pop up).
-Steve

[Tishabet]

OMG...he's using a MAC!!!!
Buuuurn him!

[GettinHeadStuds]

Who is the model!?!

[Shaun @ Tru6]

Originally posted by Tshabet
OMG...he's using a MAC!!!!
Buuuurn him!

hey Buddy, you don't want to go there! Not until you show me the PC laptop that you put to sleep at home on cable, walk down the street to the coffee shop, open the screen, have it automatically connect to the wifi network, work all morning, come home, plug it in to your home cable and automatically connect...no shutting down, restarting, changing configs. It just works 100% of the time.

and did I mention it NEVER crashes, never gets viruses, etc.

[Vipergrün]

To me, it looks like the data entry on your A/P's is gonna really suck. I'd consider being more generic on your COGS and do your actual 'cost' accounting at the inventory level. Then again, it's been quite a while since I have done this stuff and am trying to remember where it all fits on the balance sheet Those purses are nice, if I may say so myself! That bowler bag looks to be a big hit...

[dtw]

Shaun,
Your AP staff and controller will literally mutiny with those accounts. Think 5 years ahead when you have thousands of part numbers in raw materials, and all manner of legacy SKUs for finished goods. That accounting package is going to be slower than molasses. Your accounting staff will not be able to reconcile inventory accounts because there are too many of them, and period-end closing will be really tough. Again I don't know if you can do this in your MYOB - but your 1310 and 1330 accounts should pretty much end there, with minimal subaccounts.

As far as the freight-in goes: I'd build the freight into your raw materials cost. Generate your purchase orders so that freight is included as a line, and when you receive the item against your PO, freight is allocated to materials on a per-unit basis. At that point, it flows through inventory and ultimately COGS and you don't have to do separate accouting for it beyind setting up your POs.

[Shaun @ Tru6]

thanks Dave. I understand. But how do you get detailed reporting on what it costs to build a purse, track inventory for materials to build a purse and then sales?

I want to be able to run a report that says:
We sold 7 Red Bowlers with plates and only 2 Red Bowlers with tiles and be able to make product decisions based on sales.

I hope you don't mind, but here's another question: We just opened a bank account and set up a balance. I've been spending for 2 months against Capital Paid In.

To simplified data entry, can I use the purchase journal, set to automatically debit an Asset clearing account and then make a GJ entry Crediting that and Debiting my Capital Paid In? It would be much easier than making GJ entries for 100 or so small receipts and I would have the vendor info.

[Vipergrün]

Hey, I just noticed you have a purse named after the Cayenne

I think that report would come from the sales side. You could probably have a detailed SKU report that shows the actual 'built' item and its components. Does MYOB have a fabrication module?

[Shaun @ Tru6]

Originally posted by bb80sc
Hey, I just noticed you have a purse named after the Cayenne

I think that report would come from the sales side. You could probably have a detailed SKU report that shows the actual 'built' item and its components. Does MYOB have a fabrication module?

And our blue Carmel purse is Minerva Blue.

MYOB has an auto build function. See screenshot. I detail how we buy things, like bead chain in 1 foot increments at $.30 per foot, and in the build, I specify what it takes to build a purse. When I hit Auto-Build in another screen and tell it how many to make, it should do all hte math and journal entries.

What I don't like is that it also asks you to select Income, Inventory and COGS accounts for a finished purse. Inventory is easy, COGS is easy, but I've got at least 3 different ways to sell the puse: direct, web, wholesale and then automatically makes the entries once something is sold. I got the program because it can account for up to 30 price points for a given product (important to us), so clearly I've got to do some more investigating.

[VaSteve]

Originally posted by Shaun 84 Targa
thanks Dave. I understand. But how do you get detailed reporting on what it costs to build a purse, track inventory for materials to build a purse and then sales?

I want to be able to run a report that says:
We sold 7 Red Bowlers with plates and only 2 Red Bowlers with tiles and be able to make product decisions based on sales.

I hope you don't mind, but here's another question: We just opened a bank account and set up a balance. I've been spending for 2 months against Capital Paid In.

As far as reports on what it costs to build a purse, you would work up a standard cost based on what it cost you now and stick to that for a while. When you see costs escalating up (materials getting more expensive, etc) you would revisit it. What you are producing (likely) isn't very expensive in that you need to track hundreds of dollars worth of meterial going into each item.

The other guys are right though, your A/P staff (you?) and controller (you again ) are really going to hate that after a while - trust me I'm an accountant's accountant. You will likely rather make once a month or once a week JEs to record that changes. You will likely record your sales as the happen but can computer COGS after the fact by doing a count of inventory.

If you are day to day involved (as I assume you are) you will know what's selling and have a better pulse on the business than when you have others working for you. Wait until that time to produce all those reports. And then consider whether it's worth your money to have someone produce them - y ou may not need them.

Originally posted by Shaun 84 Targa
To simplified data entry, can I use the purchase journal, set to automatically debit an Asset clearing account and then make a GJ entry Crediting that and Debiting my Capital Paid In? It would be much easier than making GJ entries for 100 or so small receipts and I would have the vendor info.

In short, yes. Tedious as hell though. You might want to just find all the common vendors and put them in in total (this time only ). Put them all in individually on a going forward basis.

This sounds exciting (the business, I'm sure everyone but dtw, bb80sc and I have all dropped off because theres no Kerry/Bush content. Keep us posted on your sucess!!

[qikcpa]

gosh, Im with VAsteve's final opinion. I see a lot of people go out and spend big bucks and big time on accounting software to record and track what can be done with a few sheets of notebook paper. Keep your life as simple as possible intill you need the detailed info. Spend your time marketing.

[Vipergrün]

Call me crazy, but this thread is actually making me miss accounting a bit I use to reconcile every account to the penny every month. There were several times when I just could not get things to reconcile. Then, I'd wake up at 2:00 in the morning and the answer would be there. Sure enough, I'd go into the office the next day and that "was" the solution. BTW, my wife just saw this thread and she really likes the purses. Let me know how to order one!

Good luck.