Purchase Order for Items Cost allocation

Hi Tracy80 

Using Item Purchases you get the following Options:

1. Tick I Buy only - this means you buy the Item and imediatley expense it to the nomimated expense account. Everytime you buy this item it will be expensed directly to the one GL expense account
2. Tick I Buy, I Sell and I Inventory - this means when you buy an Item it will first be Debited to the Inventory (Asset) account, then when you Sell this Item the Average cost of the Item wil then be deducted from Invnetory and expensed to the nomimated cost of sales account that was setup on the Item card.

If you have separate Jobs or Projects that you are buying things for then you would do either of the above but then Allocate the Job Number that is associated with either the PUrchase of the Sale in the Job number field on the transaction, not have a separate GL account for each Job.

The idea is that you have one Cost of Sales account or Expense account in the General Ledger (e.g. 1111-Cost of Sale) that captures ALL purchases of that group of items but that total cost is able to be broken down further by the job number. Or more importantly you can run Job Profitability showing Sales and Costs on each Job using the Job reports.

See this link to Help to use Jobs in MYOB

I would definitley not recommend having a separate GL account for COS fore each Job number as per your example. 

• expense account 1111-Cost of Sales - Job A
• expense account 1112-Cost of Sales - Job B.

This would just create an enormous GL chart of accounts and you can't pull out the Sales for Job A and the Costs from Job A to see Job profiatility by just using GL P&L reports.

So really your only choice needs to be do I buy items into a pool as Inventory and then allocate them to a job when I use them or do I buy items in only for a specific Job and so can expeanse them directly to the Job when I purchase them. 

I hope that helps.