---
title: Processing Finished Goods With Added Costs.
description: This article shows you how to process finished goods with added costs.
---

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April 9, 2025

# Processing Finished Goods With Added Costs.

## This article shows you how to process finished goods with added costs.

Sometimes you may need to combine many different raw material items and additional outside vendor costs into one finished good.

Note:You will not achieve the desired inventory results if you do not record the removal of the raw material stock as soon as it is issued or if you record the finished good inventory before it is complete. The time period between these two points is commonly referred to as Work in Process or “WIP”.

The suggested method to track and manage the inventory and accounting while the inventory is in the WIP stage, involves the following steps:

1. Create a WIP holding location
2. Assemble the finished good from the raw materials stock
3. Transfer the finished good

## **Creating a WIP holding location:**

Create a new warehouse named WIP (or any other identifiable name).

1. Select **File \> Configuration Management** to open the **Configuration Manager**.
2. Select the **Inventory** folder **\> Warehouse**.
3. Click the **New** button (or Ctrl + N) to create a new warehouse.
4. In the **Warehouse** field, name the warehouse, WIP or any other desired name.  
   Enter all other necessary information.
5. Click the **Save** button.
6. If desired, you can setup a separate asset account to associate to this warehouse to track the value of work in process on your balance sheet.

## **Assembling the finished good from the raw materials stock:**

Creating the finished good is a three-step process:

1. Define the finished good
2. Assemble all products and costs of the raw materials into the product
3. Add the additional outside costs

## **Defining the finished good:**

This transaction will move the value of the inventory into the WIP warehouse, which will represent inventory that is no longer available. This representation is important when making future selling and inventory reorder decisions.

1. Select **Inventory \> Product Information** to open the **Product Information** window.
2. Click the **Lookup** button (or F4) and select the product that is defined as the finished good.
3. Click the **Edit** button.
4. From the **Bill of Materials** drop-down menu, select **Assembly**.
5. Select the **Components** tab that appears in the window. In this tab you will select each of the raw materials to be included in the assembly.
6. Click inside the **Product ID** field and click the **Lookup** button that appears. Select a raw material from the **Product Lookup** window.
7. Click inside the **Warehouse** field and click the drop-down arrow that appears. Select warehouse where the raw materials are created.
8. In the **Quantity** field enter the quantity.
9. Repeat steps 1-8 in this section for each raw material component.

## **Creating the assembly:**

This is the transitional process that will reflect a finished good that is a "Work In Process" and will be available to sell in the near future. The transaction is defined to move the finished good into the WIP warehouse where it can have additional outside costs added to its value.

1. Select **Inventory \> Assemblies** to open the **Inventory Assemblies** window.
2. Click the **New session** button. A new transaction will automatically be created in the session.
3. In the **Product ID** field enter the product ID manually or click the **Lookup** button next to the **Product ID** field and from the **Product Lookup** window select the finished good item that will be created.
4. In the **Quantity** field enter the finished quantity that will be made.
5. From the **Warehouse** drop-down menu select the WIP warehouse.
6. Enter all other necessary information in the header.
7. Click the **Save** button.
8. To finish the process, click the **Post** button.
9. A pop-up window will appear asking if you want to post your inventory transaction. Click **Yes** to post (update) the inventory. Click **No** to stop the posting process.
10. The **Inventory Assemblies-Transactions Report** window will open when you have successfully created the assembly.
11. Select the appropriate buttons, to print or preview the report.

## **Adding additional costs :**

The [Landed Cost](https://hub.acctivate.com/learn/landed-cost/?hsLang=en) feature is the best way to add costs to assemblies, but some customer will use our "Added Cost" functionality. When using Added Cost, there are accounting implications that need to be considered. We recommend going through our [Added Cost vs Landed Cost](https://hub.acctivate.com/articles/5769/?hsLang=en) article before going with this option.

**Important:** It is not advised to add payroll costs without proper accounting consideration as these costs are posted through your payroll module and will already be expensed on your financial statement.

## **Transferring the finished good:**

A transfer transaction will move the value of the inventory into the WIP warehouse, which will represent inventory that is no longer available. This representation is important while making future selling and inventory reorder decisions.

1. Select **Inventory \> Transfers** to open the **Inventory Transfers** window.
2. Click the **New session** button. A new transaction will automatically be created in the session.
3. In the **From Warehouse** drop-down field select the warehouse you are transferring the raw material from.
4. In the **To Warehouse** drop-down field select the WIP warehouse, which is where the raw material will be transferred to.
5. Complete all other necessary header fields (i.e. Reference, Transfer Document and Description).
6. Click the **Save** button.
7. In the data grid, click inside the **Product ID** field and enter the product ID manually or click the **Lookup** button (to select the product(s) you want to transfer from the **Find Product Lookup** window).
8. In the **Quantity** field for each product, enter the quantity.
9. When you are done, review the products on the screen. Your inventory in the database has not been posted yet.
10. To post your inventory transaction, click the **Post** button.
11. A pop-up window will appear asking if you want to post your inventory transaction. Click **Yes** to post (update) the inventory. Click **No** to stop the posting process.
12. The **Inventory Transfers-Transactions Report** window will open when you have successfully posted your inventory transaction.
13. Select the appropriate buttons, to print or preview the report for the products you just transferred.

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