7   Inventory

The inventory feature enables you to track the quantity and value of the items you have in your inventory. You can:

  • compensate for inventory variations. For example, you may find that, from time to time, your recorded inventory levels differ from what is on the shelves. These variations can be caused by data-entry errors, spoilage and theft, etc.
  • revalue your inventory. Sometimes the quantity of items recorded may be correct, but their values are incorrect. For example, a range of items may become outdated.
  • track the assembly of individual items into finished items. Many retailing and manufacturing businesses combine a number of inventory items to create finished items. For example, a retailer may combine a bottle of perfume, lotion and bath salts to make up a gift pack.

Creating items

Before you begin to track your inventory, you need to create a record for each item of inventory. An item can be:

  • a physical unit that your company may buy, sell or inventory
  • a service that your company wants to include on item invoices, for example, 'Shipping', 'Handling', and so on.

When you create an item record, you can choose to buy, sell or inventory the item. These selections determine what functions you can use the item with. For example, if you want to include a service item on an invoice (such as installation), you need to specify that you sell the item.

An item that you inventory is an item whose quantities and values you want to track. Maintaining an accurate record of on hand levels of these items requires you to do regular maintenance tasks. For example, you may need to record an inventory adjustment to write-off damaged stock.

Select... For...
I Buy this Item

Items or services you want to include on an item purchase order.

This includes items that are not for resale, and you do not need to track their quantities and values. For example, items for office use only.

It can also include raw materials you use as components to build other inventory items.
I Sell this Item Items or services you want to include on an item invoice.
I Inventory this Item

Items you buy or sell and whose quantity and values you want to track.

It can also include intermediate goods used in the productions process, such as parts used to manufacture finished goods.

Inventory opening balances If you have existing on-hand quantities of inventory items, you need to record the opening inventory level for each item. For more information, see 'Enter your inventory opening balances'.

To create an item

  1. Go to the Inventory command centre and click Items List. The Items List window appears
  2. Click New. The Item Information window appears.
  3. In the Item Number field, type a unique identifier and press TAB.
  4. In the Name field, type the name of the new item

    Tip: Copy From button To copy another item's information to this item record, click Copy From. From the displayed list, choose the item whose information you want to copy. All information for that item will be copied to the current item record except the item number, item name, supplier number, auto-build information and history information.

  5. Specify whether you buy, sell and/or inventory this item by selecting the relevant options. As you select the options, fields appear next to them. These fields change according to the combination of selections you make.

  6. Enter the appropriate accounts:

    • In the Cost of Sales Account field, type or select the account you want to use to record the costs associated with producing this item.
    • In the Income Account for Tracking Sales field, type or select the account you want to use to record the income you receive from the sale of this item.
    • In the Asset Account for Item Inventory field, type or select the account you want to use to record the total value of this item.
    • In the Expense Account for Tracking Costs field, type or select the account you want to use to record costs associated with purchasing this item.

  7. Click the Buying Details tab. The Buying Details view of the Item Information window appears. Complete the fields as explained below.

    1. [Optional] Enter the standard cost of an item. To use the standard cost price as the default price of an item, select Use Standard Cost as the Default Price on Purchase Orders and Bills preference in the Preferences window (Inventory tab).
    2. Type the unit of measure (such as 'each' or 'unit') by which you purchase the item. The buying unit is printed on the purchase order. For example, if you buy eggs by the carton unit, when you order five units in a purchase you are ordering five cartons.
    3. Enter the number of items that comprise a single buying unit. This is the number that is added to your on-hand inventory. For example, if you buy eggs by the carton unit but want to track their purchase individually, enter 12 as the number of items per buying unit. When you order one carton unit, your item inventory is updated by twelve items. If you leave this field blank, the value defaults to one.

    4. Enter the restocking information:

      • Enter the minimum level of this item you want to keep in your inventory. When you drop below this level, a re-order reminder appears in the To Do List.
      • Enter the supplier from whom you usually re-order this item.
      • Enter the supplier's number for the item.
      • Enter a re-order level quantity for the item here. If you have set a minimum level for restocking alert, you can create an order for the items easily using the Stock Alert tab in the To Do List. The default quantity showing on the order will be taken from this field.
    5. Choose the tax code you want to use when you purchase this item. Note that you can override the tax code when you record the purchase.

  8. Click the Selling Details tab. The Selling Details view of the Item Information window appears. Complete the fields in this tab as explained below.

    1. Type the retail price of one selling unit.
    2. Type the selling unit of the item (such as 'each' or 'unit'). You can type up to five characters. The selling unit is printed on the item invoice. If for example you sell by the six-pack, when you sell five units, you will be selling five six-packs.
    3. Type the number of items that comprise a single unit in this field. This is the number that is subtracted from your on-hand inventory for every selling unit. For example, if you sell by the six-pack, enter 6 as the number of items per selling unit. When you sell one six-pack, your item inventory is reduced by six items.
    4. [MYOB Premier range only] You can set pricing levels for different customers. See 'Creating custom price levels'.
    5. Select the tax code you want to use when you sell this item. Note that you can override the tax code on invoices.
    6. If you want to indicate that all prices on the Selling Details tab are tax inclusive, select the Prices are Tax Inclusive option. Deselect this option to indicate that the prices are tax exclusive.

Average Cost, Last Cost and Standard Cost

Average Cost   is calculated as the total cost of an item (the total amount you have paid to purchase the item or the cost entered when you transferred the item into inventory) divided by the number of units of that item you have on hand.

Last Cost   is the most recent purchase price for the item.

Standard Cost   can be used instead of the last purchase price as the default price on purchases. To use the standard cost price as the default price, select Use Standard Cost as the Default Price on Purchase Orders and Bills option in the Preferences window (Inventory tab).

Making inventory adjustments

From time to time you may need to adjust item quantities and values. For example, if items get damaged, you may have to write off some of your inventory or revalue it.

Use the Adjust Inventory function to make an adjustment to one or a few items. If you need to update the quantities of several items, use the Count Inventory function, see 'Performing stocktakes'.

NOTE : Print the Items List Summary report When making inventory adjustments, you may find it useful to print the Items List Summary report. This report displays on-hand quantities and values of your items.

To make an inventory adjustment

  1. Go to the Inventory command centre and click Adjust Inventory. The Adjust Inventory window appears.

  2. Enter details of the adjustment.

    1. Enter the item number by clicking in the Item Number column. Press TAB and then select the item from the list that appears.
    2. Enter the quantity variation amount in inventory units, not buying or selling units. If you enter a positive number, that number is added to your on-hand inventory. If you enter a negative number, that number is subtracted from your on-hand inventory.
    3. Enter the cost of each unit transferred into or out of inventory. The average cost of the item appears by default. If these are new items, enter their purchase cost.
    4. The Amount field displays the quantity multiplied by the unit cost.
    5. The allocation account is usually a cost-of-sales or expense account.

  3. Click Record to save the inventory adjustment.

    The following are some examples of inventory adjustments.

    Example 1 In the following example, the inventory adjustment will increase the number of units on hand by two and the total value of the items on hand by $200.

    Example 2 In the following example, the inventory adjustment will decrease the number of units on hand by two and the total value of the items on hand by $200.

    Example 3 In the following example, the inventory adjustment will increase the number of items on hand by two but will not adjust the total value of the items. The average cost of the items will decrease as a result of this adjustment.

    Example 4 In the following example, the inventory adjustment will increase the total value of the items on hand by $200 but will not change the number of items on hand. The average cost of the items will increase as a result of this adjustment.

Multiple inventory locations

MYOB Premier range only.

If you hold inventory in multiple locations, you can keep track of item quantities held at each location by recording:

The multiple locations feature is optional. If you do not track inventory quantities and values, or all your inventory is held at one location, there's no need for you to use this feature.

NOTE : Primary location The primary location is automatically created in your company file. When you set up multiple locations, your existing stock is assigned to this location. You can change the primary location ID and name, if you want, but you cannot delete it. For instructions on how to move items from the primary location to another location, see 'To record inventory movements'.

If you want to use multiple locations, you need to create a record for each inventory location. When you create one or more locations, a Location field is added to the Purchases and Sales windows. When you record an item purchase or sale, you can enter the receiving or selling location for the item in this field.

You can select a default receiving and selling location for your items. For more information see 'To create an item'.

To create inventory locations

  1. Go to the Inventory command centre and click Locations. The Locations List window appears.
  2. Click New. The Location Information window appears.
  3. In the Location ID field, type an identifier (of up to ten characters) for the new location and press TAB.
  4. Enter the name and address of the location and contact details.

  5. If you do not receive items at or sell items from this location (for example, this location is your storage warehouse), click Items cannot be sold or shipped from this location.

    If you select this option, you can only move items to and from this location by using the Move Items feature.

  6. Click OK. The new location appears in the Locations List window.
  7. Click Close

Recording inventory movements between locations

Use the Move Items window to record the movement of inventory between your locations.

Although a transaction is not created when you move inventory items, you can display the Item Movement Audit Trail report to view the details of inventory movements.

To record inventory movements

  1. Go to the Inventory command centre and click Move Items. The Move Items window appears with a list of all your items, on-hand quantities and locations.

    NOTE : Moving items using the Item Information window You can also record an item movement by clicking Move Items in the Location tab view of the Item Information window.

  2. Select the item you want to move. You can locate an item by scrolling or by typing the item number in the Search field.

  3. Record the quantities held at each location

    1. The On Hand column shows the total quantity available in your inventory across all locations.
    2. Increase the quantity for locations receiving items and reduce the quantity for locations where items are moved from.
    3. The value in the Out of Balance field must be zero before you can record the movement.
  4. Repeat step 3 for each item you want to move.
  5. Click Move Items to record the movements.

Building items

Building items is the process of taking two or more items, known as components, to make up another item, known as a finished item.

You do this by transferring the inventory quantities of the components to that of the finished item. For example, you could transfer the inventory quantity of timber and fabric (components) to furniture (the finished item).

You can build items in two ways:

Note that before you can build a finished item, you need to create an item record for it.

To build items manually

  1. Go to the Inventory command centre and click Build Items. The Build Items window appears.
  2. Type or select the item numbers of the finished item you want to make and the component items you want to transfer.

  3. Type the transfer quantity. Type a positive number for the finished item (this number is added to your on-hand inventory). Type a negative number for the component items (this number is subtracted from your on-hand inventory).

    The value in the Out of Balance field must be zero before you can record the transaction. That is, in the Amount column the amount for the finished item must be equal to the sum of the amounts for the components.

  4. [MYOB Premier range only] If you store an item at multiple locations, select the location where the item is held. Note that this field only appears if you use more than one location in your company file. For more information, see 'Multiple inventory locations'.
  5. Enter the unit cost of each item to be included in the build.
  6. Click Record to save the inventory transfer.

Auto-building items

For items that you repeatedly build, you can use the Auto-Build function to build the finished items.

Before you can build a finished item using the Auto-Build function, you need to define what items are needed to build the item.

TIP : Auto-build from the To Do List You can also auto-build items using the To Do List. (In the Stock view of the To Do List, select the items you want to build and click Order/Build.)

To define an Auto-Build item

  1. Go to the Inventory command centre and click Items List. The Items List window appears.
  2. Click the zoom arrow (⇨) of the item you want to build. The Item Information window appears. 3 Click the Auto-Build tab.
  3. In the Minimum Level for Restocking Alert field, type the minimum level of the item you want to have in inventory. 103 CHAPTER 7 INVENTORY

  4. Click Edit List. The Auto-Build Information window appears.

  5. In the List what it takes to build field, type the number of item units you want to be made. If bulk quantities of materials are purchased to build an item, it may be easier to specify the materials required to build a greater quantity of the item, such as 10 or 20.

  6. Enter the details for each of the components required to build the item.

    1. Click in the Item Number column and press TAB. Your items list appears.
    2. Select a component item required to build the new finished item and then click Use Item. The details of the component appear in the Item Number and Name columns.
    3. In the Quantity column, type the number of component items required to build the specified quantity of the finished item.
    4. Repeat from step a for each component required to build the new finished item.
  7. Click OK when you have entered all the components.
  8. Click OK and then click Close to return to the Inventory command centre.

To auto-build an item

  1. Go to the Inventory command centre and click Auto-Build Items. The Auto-Build Items window appears.

    1. This column displays all items that you have designated as finished items.
    2. The On Hand, On Order and Net on Hand columns show the current levels of your finished items
    3. Type the number of finished items you want to build.
  2. Type the quantity of finished items you want to build in the Qty. to Build column. (Click None if you want to change all numbers in this column to zero).

  3. Click Build Items to begin transferring component items to finished items. The Build Items window displays the details of the transfer that will occur when the finished item is built.

  4. Review the entries in this window to make sure that the quantities, unit costs and total inventory values are correct. Note that the quantities of the components in the list appear as negative numbers, while the quantities of the finished items in the list are shown as positive numbers.
  5. 5 Click Record to update your inventory quantities and values.

Performing stocktakes

You entered your opening stock quantities in the Count Inventory window when you set up your company file.

You can also use the Count Inventory indow to make adjustments to item quantities during regular stocktakes or any time you find discrepancies between the actual quantities of items on hand and your records of those quantities.

Each inventory adjustment must be allocated to an account so your accounting records accurately reflect the reasons why your inventory needed adjusting. For example, you can use an expense account - called 'Shrinkage/Spoilage' - to track loss or theft of items.

Before you perform a stocktake

  • [MYOB Premier range only] Record any inventory movements between locations before counting your inventory. For more information, see 'Multiple inventory locations'.
  • Record any build item or auto-build transactions before counting your inventory. Otherwise, a missing inventory item that was used to build another item will be accounted for as an expense, such as loss or shrinkage. For more information, see 'Building items'.

  • Count the actual items in your inventory. You can print the Inventory Count Sheet report, which lists all your inventory items, and manually record quantities on it.

    NOTE : Inventory-count filtering options You can print the Inventory Count Sheet either by clicking Print in the Count Inventory window or from the Index To Reports window, where you can also set report filters.

To perform a stocktake

  1. Go to the Inventory command centre and click Count Inventory. The Count Inventory window appears.

    This window lists all the items and their current on-hand quantities. Quantities are inventory units, not buying units or selling units. For example, if you buy soft drinks by the six-pack and store it by the can, a quantity of 24 in the On Hand column means you have 24 cans in your inventory, rather than 24 six-packs.

  2. [MYOB Premier range only] If you store inventory at multiple locations, select the way you want to group your items. You can group items by item number or by location.
  3. [MYOB Premier range only] If you store inventory at multiple locations and you need to record a quantity for an item that previously had no recorded on-hand quantity, select the Include Zero On-Hand Quantities option.

  4. In the Counted column, type the actual quantities of the items. Any discrepancy between the counted quantity and the on-hand quantity appears in the Difference column

  5. Click Adjust Inventory. If there are differences between on hand and counted values, the Adjustment Information window appears.

  6. [Optional] You can select a default adjustment account for tracking all the adjustments you entered in the Count Inventory window. This account is normally an expense account such as Shrinkage/Spoilage. It should not be your inventory asset account.

    If it's necessary for you to use different accounts to track the adjustments you made in step 4, do not enter an adjustment account here. Instead, enter the accounts next to each adjustment transaction, see step 8 below.

  7. Click Continue. The Adjust Inventory window appears, displaying a line item for each adjustment you entered in the Count Inventory window in step 1.

  8. If you didn't enter a default adjustment account in step 6, enter the accounts you want to use to track each item's change in quantity in the Account column for each line item.

    If you entered a default adjustment account, that account appears in the Account column for each line item.

  9. [Optional] Add a reason for the adjustment in the Memo field (for example, 'Annual stocktake 2009').
    10. Click Record

Reviewing your inventory information

The following tools help you review your inventory information.

Tool Description
To Do List Displays an alert for items that need to be purchased or built.
Analyse Inventory Gives you a list of all your items, including the number on hand, number committed and number on order. If you use multiple locations for inventory items, you can group the items by number or location.
Inventory reports Inventory reports help you keep track of your item quantities and value.
View history You can view the sales and purchase transaction histories of an item or supplier for seven years
Find Transactions Find Transactions helps you find inventory transactions.
Items Register Gives you a list of your inventory transfers, adjustments, sales and purchases for all items, or it can be filtered to show the history of a single item.
Transaction Journal Lists journal entries of your inventory transactions.

To view a list of all items that need to be built or purchased

The Stock Alert view of the To Do List displays all items that need to be built or purchased to fulfil customer orders.

In this window, you can:

  • automatically record a transaction for the items that you need to buy or build
  • change the details of an order or auto-build transaction.
  1. Click To Do List from any command centre. The To Do List window appears.
  2. Click the Stock Alert tab. A list of all items that need to be ordered or built appears. The On Hand column shows the quantity of each item actually on hand. The On Order column shows the quantity of each item already on order. The Committed column shows the quantity of an item on backorder for customers.

  3. If you want to:

    • automatically order or build items, click the select column (⇨) next to each item you want to build or order and then click Order/Build. A date window appears with the current date displayed. If you want to, enter a different date and click OK.

      An order will automatically be created for the items that need to be purchased. The restocking information entered in the Buying Details view of the Item Information window is used to determine the supplier and quantity to order or the items to build.

    • change the details of an order or auto-build transaction, click the zoom arrow (⇨) next to the transaction. Complete the transaction in the window that appears. When you have finished, close the To Do List

To analyse inventory

The Analyse Inventory window shows detailed information about your inventory.

  1. 1 Go to the Inventory command centre and click Analysis. The Analyse Inventory window appears.
  2. Display the required view of the Analyse Inventory window
For users of... The following views are available...
MYOB Accounting
  • Summary - displays all inventoried items.
  • Item Number - displays all customer and supplier orders for a selected item
MYOB Premier range
  • Group by Item - displays all inventoried items.
  • Group by Location - displays all inventoried items grouped by location (if you have multiple locations).
  • Item Number - displays all customer and supplier orders for a selected item

To view inventory reports

There are several reports that you can generate to keep track of your inventory. The following are some of the reports you may find useful. For information on finding, customising and printing reports, see Chapter 12, 'Reports,'.

  • Analyse Inventory Summary report. The summary and detailed versions of this report can serve as your order book. You can view a list of all your sales orders and purchase orders for all or selected items.
  • Items List Summary report. This report shows information about your items including their on-hand quantities and total value. The Items List Summary report also shows an item's current average cost price, which is important to know when making inventory adjustments. You can use this report to compare your total inventory value to the total of your inventory asset accounts.
  • Price Summary report. This report lists your item prices, and is useful for sending to your customers. You can convert this report to HTML and post the list on an intranet or Internet site.

To view sales and purchases history for an item

  1. Go to the Inventory command centre and click Items List. The Items List window appears.
  2. Click the zoom arrow (⇨) next to the item you want to view. The Item Information window appears.
  3. Click the History tab. The History view displays the purchase and sales history for the item for seven years: five past years, the current year and the next year.

Setting item prices

You can change the default selling prices of the items you sell using the Set Item Prices window. You can still change an item's price at the point of sale, which will override the default price for that sale only.

Average Cost and Last Cost

Average Cost is calculated as the total cost of an item (the total amount you have paid to purchase the item or the cost entered when you built an item) divided by the number of units of that item you have on hand.

Last Cost is the most recent purchase price for the item.

To change the price of an item

  1. Go to the Inventory command centre and click Set Item Prices. The Set Item Prices window appears. This window lists all your inventory items and their current prices. The last cost or the average cost of each item is shown, depending on whether the Last Cost button or the Avg Cost button is clicked.

    If an item is not listed, it means that you have not entered the item, or have not selected the I Sell This Item option on the Profile tab of the Item Information window.

  2. Click in the Current Price column of an item and enter a new price. Do this for each item price you want to change. You can enter prices with up to four decimal places. The total amount is rounded to two decimal places on the invoice.
  3. Click OK.

To update the prices of multiple items at once

  1. Go to the Inventory command centre and click Set Item Prices. The Set Item Prices window appears.
  2. Click the select column () next to the items that require a price update.

  3. Click Shortcuts. The Pricing Shortcuts window appears.

  4. Indicate how you want the price rounded, the basis for calculating the price, and so on.

    For example, if you want to mark up the items' prices by 10%, select the Percent Markup option and type 10 in the adjacent field.

  5. If you want to:

    • update the items you marked in step 2, click Update x Items Only
    • update the prices of all items, click Update All Items.

Customising inventory

Your MYOB software provides a number of inventory customisation features:

  • Custom price levels  [MYOB Premier range only] You can assign up to six price levels to different types of customers. For example, you can set a lower price for your wholesale and long-term customers.

    You can also set up to five quantity breaks for each customer type and offer a discounted price for each break. For example, you might have quantity breaks of five, ten, twenty, fifty and one hundred. For each of these breaks, you can set six different price levels.

  • Custom fields  You can ensure certain information is always recorded for an item, such as warranty, serial number and manufacturer. Use these fields for information that you do not need to use as report filters.
  • Custom lists  You can record information about an item and then run reports based on the custom lists. For example, if you are running a trailer-rental business, you might have custom lists of colour, type, and location. This means you could run a report to include only blue cage trailers at the Main Street station.

Creating custom price levels

MYOB Premier range only.

You can customise your pricing according to customer status and sales quantities.

For example, a level-three customer might pay $350 for a single quantity of the item, but if they purchase ten units of the item they will only have to pay $330 each for them. A level-four customer might be charged $310 and $290 respectively.

NOTE : Volume discounts The volume in the Volume Customer Discount field in a customer's card applies in addition to the quantity-break price levels you set up.

To set custom price levels, you can give each level a name and then type a price for each level for each quantity break.

To name your price levels

This task is optional. If you do not give names to price levels, default names will be used (Level A, Level B, and so on).

  1. Go to the Lists menu, choose Custom List & Field Names and then Price Levels. The Custom List and Field Names window appears.
  2. Enter names for the price levels as you want them to appear in the Selling Details view of the Item Information window.
  3. Click OK.

To specify price levels and quantity breaks for an item

  1. Go to the Inventory command centre and click Items List.
  2. Select the item and click Edit. The Item Information window for the item appears.
  3. Click the Selling Details tab. The base selling price you entered for this item in the upper section of the Selling Details view appears at Level A (or whatever name you have chosen for this field).
  4. In the remaining fields (Levels B to F, or whatever you chose to name them), enter the selling price of this item. Make an entry for each price level you want to use.

  5. If you want to specify quantity breaks for a price level:

    1. Enter the first quantity break in the first Over field and enter the price for orders over the quantity break.
    2. In the next Over field, enter the new quantity break. Assign a price for this quantity break.
  6. Continue to enter up to five quantity breaks, and assign up to six price levels. Note that each quantity break must be greater than the previous quantity break.
  7. Click OK.

To assign a price level to a customer

  1. Go to the Card File command centre and click Cards List. The Cards List window appears.
  2. Locate the customer card you want to assign a price level to and click the zoom arrow (⇨) next to it.
  3. Click the Selling Details tab.

  4. Select the price level you want to assign to the customer in the Item Price Level field.

    If you do not assign one of the six price levels, the item's base selling price is used instead.

  5. Click OK.
  6. Click Close

Creating custom lists

Custom lists enable you to sort and group your inventory items on reports.

For example, when you run the Analyse Inventory Summary report, you can just include items sorted by the same list name, such as by location or colour.

To name a custom list

  1. Go to the Lists menu, choose Custom List & Field Names, and then click Items. The Custom List and Field Names window appears.

  2. Enter a name for each custom list you want to create and click OK. These names will now appear in the Item Information window.

To create custom list entries

  1. Go to the Lists menu, choose Custom Lists and then Items. The Custom Lists window appears.

  2. Select the list to which you want to add entries in the Custom List field.

  3. Click New, enter the name of a list entry and then click OK. For example, if you have a colour list, you could enter Yellow

  4. Repeat step 3 until you have created all your list entries.
  5. Click Close to close the Custom Lists window.

To assign a custom list entry to an item

  1. Go to the Inventory command centre and click Items List.
  2. Click the zoom arrow (⇨) to the left of the item. The Item Information window appears.
  3. Click the Item Details tab and select the required entry from the custom list.

Custom lists and inventory reports

You can generate reports using your custom lists as report filters. For example, you can generate a report that includes only those items with a certain list entry, such as the colour red. For more information on setting report filters, see 'Select the data to be printed'.

Creating custom fields

Custom fields can be used to record additional information about an inventory item, but cannot be used to filter inventory reports. Examples of how you might name the custom fields are 'Warranty,' 'ID No.' and 'Manufacturer'.

To name custom fields

  1. Go to the Lists menu and choose Custom List & Field Names and then Items. The Custom List and Field Names window appears.

  2. 2 Type the new field names in the Name of Custom Field fields and click OK.

    These field names will appear on the Item Details tab of the Item Information window for all items.

Printing custom field entries on your purchase orders and invoices

You can customise your invoices and purchases to include one or more custom fields. For more information on customising forms, see Chapter 13, 'Forms,'.