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Dynamics 365 Community / Forums / Microsoft Dynamics GP (Archived) / Items and SOP Setup - ...
Microsoft Dynamics GP (Archived)
Suggested Answer

Items and SOP Setup - how to capture COGS on flat fees/services without Distribution/Quantity Shortage Warning

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Our client  sells items as services or flat fees, but wants to capture and calculate margins and cost of goods sold on each item.     I tried setting up as a flat fee or service and the COGS didn’t calculate.     I then set up an item with a valuation method and it does calculate, but I want the window below to stop opening (the Sales Quantity Shortage Options)– is there a setting?  Or another method when setting up the inventory item?      

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  • Suggested answer
    Mahmoud Saadi Profile Picture
    Mahmoud Saadi 32,738 on at

    I do have few concerns regarding this issue. First of all, How would you have a valuation method for a service or flat fee item ? These item types are not tracked in terms of (Quantity), and the Item Card Maintenance Window won't allow any valuation method to be entered once one of these types is chosen

    On the other hand, considering Service Item and Flat Fee on the SOP will not affect the COGS account, since this account is only affected by (Sales Item) type. So if you want to track both, cost and sales, you need to set the item as a (Sales Account).

    Work around solution would be considered to handle this issue without affecting the Logical Design of Accounts, as shown below;

    • Setting a service item (No valuation Method, and No Quantities are Tracked)
    • When an invoice is posted, the COGS account should not be affected, only the sales account
    • To track the information of (Cost), you could use Analytical Accounting to record the cost as "Analysis Information" only.

    Hope this helps, 

  • Suggested answer
    Richard Whaley Profile Picture
    Richard Whaley 25,195 on at

    There is not a non-inventory item type that takes costs to sales (COGS) in MS Dynamics GP.

    Services are typically used in manufacturing to absorb the cost of services performed by an outside vendor in the manufacturing process into WIP which is then carried into the Inventory Asset account of the physical item and carried to COGS.

    But for a pure service, we are stuck with no amount being taken to COGS.

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