In QuickBooks Enterprise is a feature that will allow the automatic update of cost and price information within the software.
The above screenshot shows the preference for Automatic Cost & Price Updates.
These settings affect the Cost field in an item setup window. This is not the QuickBooks calculated cost, but the Cost field that is set by the user.
Although the QuickBooks calculated cost (Average or FIFO if it is selected with Advanced Inventory) is used in accounting computations, the user edited Cost field is used in cost and price calculations.
Several settings are available in the Automatic Cost & Price Updates window. The top dropdown field labeled Markup, gives the QuickBooks user two choices. Percent over cost or Amount over cost.
The middle section determines how automatic cost updates will be handled by QuickBooks. The first field is labeled “If item cost changes on a purchase. The choices are Always update item cost, Never update item cost, or Ask about updating item cost. Selecting Always or Ask and then assuming the QuickBooks user responds positively when asked, will cause QuickBooks to update the Cost filed in the item setup window.
The second field is labeled “When item cost changes.” The selections for this field are Always update sales price, Never update sales price, or Ask about updating sales price.
In the sample file is a product named Virus Vac A. The cost field is filled in with the amount 37.50. The price is set at 75.00.
If we enter a bill purchasing Virus Vac A at 30.00, the following popup appears.
The popup appears because the setting selected in preferences is “Ask about updating item cost.” Yes has been selected as the answer in the graphic in order to show the price options. If yes is not selected, the price update options are grayed out. If you do not automatically change the cost, there is no way to automatically change the price.
So, the new cost is $30. QuickBooks will change this value in the item window when this transaction is completed. The markup on the old cost is 100%. A cost of 37.50 times 100% yields a price of 75.00.
Now, if QuickBooks updates the new cost to 30.00, in order to maintain the price markup of 100%, the price will be updated to 60.00.
Let’s go back to our Automatic Cost & Price Updates window.
The bottom section in the preference window deals with assembly type items. If we are having QuickBooks automatically update costs for inventory items, should these new costs then add up to create a new cost for an assembly item. The checkbox indicates yes, QuickBooks should make that calculation.
If the cost of the assembly total bill of materials changes, should QuickBooks automatically update the sales price? Again, a selection in this checkbox indicates that yes, it should.