Cost in QuickBooks

When you edit an Inventory Assembly item in QuickBooks you will see three “cost” values:

1.  Cost: This cost value shows as the default when you purchase an item, and is used in inventory valuation only when you add a new item and you enter an on-hand quantity. IN ADDITION, if you are using any QuickBooks function that adjusts the “sales price”, the calculation will use this cost.

2.  Avg. Cost: This is the average cost of the item, which is used in inventory valuation. When you adjust the value of the item in adjustments, or issue a “build” transaction, QuickBooks updates this cost. You cannot directly edit this value.

3.  Total Bill of Materials Cost: This value only shows on this screen. It represents the total cost of the components as shown in the Bill of Materials listing above. These are based on the “cost” field of the component items.

It can be confusing, and QuickBooks has complicated this by calling the first field simply “cost” instead of something like “standard cost” or “purchase cost”.