Variance COGS disaster

Question

Hello, 
 In order to track recycling containers, we create inventory items. Each month, it would start out as zero. And as we bill customers, it would be negative, until the month end, when we do reporting and pay for all containers, and it would zero again. 
 This was working well for recycling tracking. However we didn't realize it was messing up variance and COGS. Now the variance is off the chart, and the COGS no longer make sense. Now after doing some research, I realize inventory items shouldn't constantly dip below 0. So we should have set it up as service item perhaps. 
 I don't know where to begin fixing. I tried to do inventory adjustment, but it doesn't fix the variance account, nor the COGS. How do you fix a variance account that is getting out of control? And is there a way to reset COGS? Any help is much appreciated.

Keith L · Accepted Answer

Hi Cou, 
 Suggestion is that you can look at that inventory record, Quantites tab first. Since you use locations, plesae take a look at what is the quantity and value on hand in each location. 
 After you get the quantity number and total value of that inventory in each location, you can open your Inevntory Adjustments & Transfers window, and adjust that inventory in each location to zero in both qantity and total value. You can do so by first selet the location in the At Location box. Next, you can select the inventory under the item column. Then, you can adjust the Qty column and Amount column. The Unit Cost column will automatically adjusted based on the Amount, which is the total value, you enter. 
 After you make the inventory go back to zero in both quantity and total value, you can again use the Adjustments & Transfers window the change the quantity and value to whatever you like for that item. 
 Hope this helps

GwG · Answer

Keith method may fix the current and furture COGS but not previous calculations. If you run an Income Statement im sure the COGS is way out of balance. GJ = General Jounral Report.

Sage 50 Canada

Variance COGS disaster

COMMUNITY

COMPANY

PARTNERS

SUPPORT & TRAINING