Thanks for reading!
>what does materials mean? Is it the cost-of-materials-for-what-you-sold, or cost-of-everything-you-bought (including both sold items and inventory you're still holding?)
It's the latter, cost-of-everything-I-bought.
>The reason is that it's usually more common to only count the former (cost of materials for what you sold) when tracking profit/loss. Materials you used for inventory that are not yet sold are counted as assets on your balance sheet, since the expectation is that you'll be able to turn that into cash at some point.
Thanks, this is helpful feedback! This is my first time managing an inventory, so I still have a lot to learn about bookkeeping for it.
I should mention that the numbers so far are preliminary based on my own bookkeeping, so I'll talk to my accountant about how to better map the transactions to my balance sheet and income statement.
>You'll start tracking "turn", how quickly you sell out an existing batch, and can better plan for purchasing more to keep a healthy level that is in that Goldilocks-zone of enough-to-fulfill-orders-quickly, but less than holding too much that ties up cash.
That's interesting. I'm curious to see how much this will affect the inventory I keep on hand.
Right now, each product consists of several components that have different properties, so when I choose how much to stock each item, it's a function of:
* How many orders could conceivably happen during a sudden surge of interest?
* How long does it take to restock this item? (some items take 2 months to be manufactured overseas, others ship overnight)
* How much space does this item take up in my house? (easy to store 5000 ribbon cables, not so easy to store that many Raspberry Pis)
* How much does this item cost? (easier to err on the side of caution for cheap items)
* How confident am I that I'm going to keep using this component?
>what does materials mean? Is it the cost-of-materials-for-what-you-sold, or cost-of-everything-you-bought (including both sold items and inventory you're still holding?)
It's the latter, cost-of-everything-I-bought.
>The reason is that it's usually more common to only count the former (cost of materials for what you sold) when tracking profit/loss. Materials you used for inventory that are not yet sold are counted as assets on your balance sheet, since the expectation is that you'll be able to turn that into cash at some point.
Thanks, this is helpful feedback! This is my first time managing an inventory, so I still have a lot to learn about bookkeeping for it.
I should mention that the numbers so far are preliminary based on my own bookkeeping, so I'll talk to my accountant about how to better map the transactions to my balance sheet and income statement.
>You'll start tracking "turn", how quickly you sell out an existing batch, and can better plan for purchasing more to keep a healthy level that is in that Goldilocks-zone of enough-to-fulfill-orders-quickly, but less than holding too much that ties up cash.
That's interesting. I'm curious to see how much this will affect the inventory I keep on hand.
Right now, each product consists of several components that have different properties, so when I choose how much to stock each item, it's a function of:
* How many orders could conceivably happen during a sudden surge of interest?
* How long does it take to restock this item? (some items take 2 months to be manufactured overseas, others ship overnight)
* How much space does this item take up in my house? (easy to store 5000 ribbon cables, not so easy to store that many Raspberry Pis)
* How much does this item cost? (easier to err on the side of caution for cheap items)
* How confident am I that I'm going to keep using this component?