2. Types of Inventory - Costbucket

2. Types of Inventory

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Each product or service is first assigned a category then further defined by the unit of measurement, type, and tax.

Product or service types are broken down into the following types:

Assembled – A product sold (parent) from the grouping of other products or components (child). Inventory tracking is available only on the components. No inventory is tracked at the parent level. When processing a sale, the parent product is credited to sales in the profit and loss and the components (child) are transferred to the profit and loss from the balance sheet.
Manufactured – A product sold (parent) from the grouping of other products or components (child). A work order has to be created to deduct the components to make the products and calculate the cost of making the finished product. Inventory is tracking on both the components and parent levels. When processing a sale, the parent product is credited to sales in the profit and loss and the completed finished manufactured goods are transferred to the profit and loss from the balance sheet.

Purchased – Products bought from a third-party vendor for resale.

Wage / Labor – Service cost of a third-party vendor using the same measurement basis as to how sold.

Dummy – Products or Service sold with no inventory movement tracked.