Inventory Assemblies, Builds & Pending Builds

Assembly Items: What are they? How does this affect my inventory?

  • Inventory Assemblies are items that are used on Invoices, Sales Receipts and Purchase Orders where several items on the Items List make up the whole item that is sold or purchased. Assemblies combine inventory part items and other items to create a single item. This is the method for defining a Bill of Materials which is a list of the component parts. When building an assembly you can add Non-inventory parts, Other charge items, Service items to the Bill of Materials.

Note: The inventory build is the actual assembling of the inventory components in the Bill of Materials that will allow the inventory assembly items to be added to inventory as a whole item.

  • When creating an Inventory Assembly item there is a two-step process. The first step is to define the Bill of Materials. After adding the items to the assembly, the second step is to build a certain number of the assembled items. The importance of the build process for assembly items is that this keeps the inventory quantities accurate in QuickBooks. As a build is defined, the items that are removed from inventory are added to the assembly. Thus reducing the inventory, but increasing the assembly items quantity correctly. In QuickBooks this will remove those component parts from inventory so that new quantities for the assembled items are added.

Cost for Assembly Items:

  • Cost is calculated by adding together all of the items below the Bill of Materials table. QuickBooks uses an Average Cost method to track the costs of inventory and inventory assemblies. The cost is determined by the total asset value of the inventory part or assembly divided by quantity on hand at the particular point in time. Assembly asset values are set by the purchase price or the build costs. If you purchase an assembly item from a vendor, the asset value is the amount spent to purchase this item.
  • If the assembly is a build, asset value is the sum of the average costs of all of the component parts. In other words, there are five items in the Bill of Materials for an assembly. These five items all have different costs. QuickBooks takes each cost of the item, divides each item cost by that items quantity on hand in inventory, then adds all five average costs together to determine the average cost of the assembly to create the Total Bill of Materials Cost.

What is this cost field, and why you should care:

This Cost field is to enter the total cost of the assembly. Sometimes there are costs associated with an assembly that are not shown by the Bill of Materials. This can be a specific markup amount or any other costs. If the assembly item is purchased instead of built, this is where the amount, (Cost), normally paid would be entered.

As a suggestion, wait to enter an amount in this box until all of the components are entered for the assembly. Below the Bill of Materials table, as shown above, is the Total Bill of Materials Cost.

This Cost amount is used in QuickBooks in the following manner:

  • Auto enters the Cost field on all transaction forms for purchases like Purchase Orders, Bills, and Checks
  • If using a Default Markup Percentage, this Cost field sets up the price of the inventory assembly item used
  • To adjust the item price that is part of an assembly item by a fixed amount or percentage of Unit Cost
  • The cost will be displayed on the Item Listing report and on the Price List report
    • When building the item yourself, the Average Cost will be the total of costs of all items shown in the Bill of Materials
      • The Cost field will be filled in manually
      • Average Cost will be the total of the costs of all items in the Bill of Materials
  • Creating a new inventory assembly, enter the existing On Hand quantity
    • QuickBooks calculates Total Value tracked to the Asset account by multiplying the Cost entered by the On Hand quantity
  • Calculates the initial Average Cost of a new inventory assembly item
    • The initial Average Cost is the initial Total Value divided by the initial On Hand quantity


  • Once the Inventory Assembly item is created in the Items List, the assembly has to go through the Build stage. This is the method for adding the assembly item to inventory with QuickBooks.

How to create a Build:

  • Select Vendors from the top menu bar
  • Click on Inventory Activities > Build Assemblies

  • Next select the Assembly Item drop-down arrow, select the assembly item to build

  • When the Assembly Item fills the window, it will be possible to determine how many assemblies can be built with the current inventory in stock. This window will show how many assemblies are already in stock (Quantity on Hand), the amount already promised (Quantity on Sales Orders), and how many are reserved for other assemblies, (Quantity Reserved for Other Assemblies) that have not been completed as of yet. Some of the information may not show if the inventory preferences are not set to show them. The Build Point (the minimum quantity to keep on hand) is shown in this window also.

  • The area in the middle of the Build Assemblies window shows the components needed to create the assembly items so that they are correctly entered into inventory. The Quantity On Hand and Quantity Needed columns for the current build are also shown in this window. As a build is completed, or the item is used in some other manner in QuickBooks, the quantity in this window will change and update.

  • Under the window are Maximum number you can build from the quantity on hand: and the Quantity to Build fields. The maximum number shown comes from the window above. This shows that with all the inventory available for this assembly item, this is the amount you can actual build to put in your inventory without having to order from the vendor. In the example shown, there are five listed in the Quantity On Hand in the window above, and the assembly only requires one of this item when it is built. When this assembly is built five assemblies will enter the Items List as available for sale.The Quantity to Build field is where the number of assemblies that you would like to build. This is a manual entry and can be any number, even if it exceeds the amount of on hand quantities. If there is not enough of available components, the amount needed to complete will update the Quantity Needed column.

Advance Inventory Builds:

Note: Advanced Inventory is only available with QuickBooks Enterprise Solutions. This is an add-on to the program where you can track different locations where your inventory is stored. This can be different stores, trucks that carry your inventory.

  • If using Advanced Inventory it is possible to use components from multiple sites. The window below will show information across all of your sites. While the window looks similar to the regular Build Assemblies window, there are some differences. Accessing the window is the same by going to Vendors > Inventory Activities > Build Assemblies. Use the drop-down for the Assembly Item to select the assembly to build.

  • One of the new areas that has to be completed when using Advanced Inventory is the Finished Assembly Inventory Site. This a drop-down listing of all of the sites that are currently located within the QuickBooks Enterprise Solutions program. This is the location where the assembly will be stored after completion of the build.

  • In the Components Needed to Build Assembly window there is an additional column when Advanced Inventory is added to QuickBooks Enterprise Solutions. The Site column has a drop-down menu where each site that is included in QuickBooks Enterprise Solutions is shown. What this does is allow the user to select which site the component is located so that when the assembly is built the site reduces the amount of the available inventory at that site.

  • The rest of the window is the same as a window without Advanced Inventory. Next we talk about Pending Builds.

Pending Builds:

  • During the course of generating builds, you find that you do not have enough of a component item to finish the build of amount of assembly units. When this happens, the build can still be created, but when it is saved a message will appear.

  • After selecting the Make Pending option in the window, the build will look like the following;

  • A pending build is a non-posting transaction, will not affect the component inventory parts and do not appear in any reports with the exception of the Pending Builds Report. Locate the Pending Builds Report.
  • Reports at the top of the menu bar, Inventory, Pending Builds

  • The Pending Builds report will show what Item is needed for which Pending Build, along with the quantity needed, and any Memo that is added to the build.
  • To display the build transaction, highlight the line for the pending build you would like to look at and double click to open.


Additional Information on Pending Builds:

  • If you are using the Advanced Inventory feature, there will be a report option for Pending Builds by Site.
  • While inventory included in a pending assembly build will not be accounted for when average cost is calculated, editing a build transaction that is not pending can cause those assembly builds to change to pending. The only way to see if this is happening is the monitor the Pending Builds report regularly. This action will also change the average cost calculation in QuickBooks to report differently.
  • You must have QuickBooks Premier or Enterprise Solutions to create and build inventory assemblies, but an existing assembly can be viewed, edited, sold and reported on with any version of QuickBooks.
  • Received all of the components into inventory to meet the requirements specified in the Bill of Materials to mark the build as Final? Here is how to do that.

Marking a Pending Build Final:

  • If the build is not already showing in the Build Assembly window, locate the build and open it
    • The best method to locate the Pending Assembly is with the Pending Builds report
    • After opening the report, double click on the build you would like to make final
  • In the Date field, enter today’s date
  • Press Tab on the keyboard and the quantities in the Qty On Hand column and the Maximum number available to build are updated to show the current inventory quantities
  • With the quantity for the Maximum number that can be built from the quantity on hand at least as much as the Quantity to Build, click Remove Pending Status
  • Then click on Build & Close or Build & New depending on which you would like
  • While the build is not marked as Final on the screen, this will increase the number of assemblies available for sale

Changing the Date on a Build:

When creating builds, the ability to complete a build is directly tied to the quantities of the component items in inventory that are available on the date of the build. If the date of the build is changed several situation can happen in QuickBooks.

  • Any and all of the quantity information on the build can change
  • The ability to complete the build can change
  • The quantity of the components in the Build Assembly window can change in whole or part
  • Builds that were shown as completed before can change to Pending

If you have to change the date on a build, enter a note on the Memo line as to what the original date of the build would have been and why there was a change. The better option would be to close and finalize this build and create another with the date desired.

Making changes to a Build Transaction:

While changing the date on a build can be a determinant, there are other changes that can change the inventory information in your QuickBooks file that you may want to consider. Here are some questions to ask yourself before making any changes. The answers to these questions will help you to determine if the Average Cost will be accurately reported by QuickBooks.

  • How much inventory is tied up in assembly items?
  • How much of a value change will this transaction represent?
    • If the value change is very small, the change to Cost Of Goods Sold will also be small.
  • How may assembly items will this change affect by changing this transaction?
  • How many levels are these are these assembly items nested in the company file?
  • Can changing this transaction change a significant number of assemblies to show Pending, thus preventing them from inclusion in the Average Cost calculation?

An Example:

QuickBooks accounts for the changes to the purchase price of your inventory. When creating a build, QuickBooks calculates the average cost of the assembly items by the following.

  • The average cost is calculated for each component item
  • Then by multiplying the quantity of each component items that is specified in the assembly definition with the quantity of the assembly item.
  • After adding and multiplying for this quantity, the sum of all component costs are then divided by the number of assembled units.

The following summarizes how the calculations work;


Transaction type

Item type

Component quantity in assembly

Item quantity

Cost of item

Average cost

Purchase 1, July 10, 2010

Inventory part 1





Purchase 2, July 25, 2010

Inventory part 1





Purchase 1, July 10, 2010

Inventory part 2





Purchase 2, July 25, 2010

Inventory part 2





Purchase 3, August 5, 2010

Inventory part 2





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