Accounting & Bookkeeping & Small Business Forum

[Guest]

OK I've recently begun a homebased handmade soap, bath salts, and fizzies company. I have accounting experience however not in the manufacturing field. I sell the products individually as well as in gift baskets. My question is do I inventory my baskets or should I expense them as packaging materials? I will have a raw materials account for the products used to produce my products, but I don't think this is the proper allocation for the baskets. I also don't believe that I should be expensing these baskets because I do keep them on hand for whenever an order comes up for a gift baskets. Would I include the baskets in the same inventory account as my finished products and pull one basket with an order for gift baskets along with the quantity of products that go into the basket? Or should I create a separate product code for the baskets and create essentially basket kits that pulls the finished products out for each basket that is ordered? I know that I'm probably thinking to hard on this but I really don't want to have to do it over. Any help would be greatly appreciated.

Thank you
Sara Dreger

[Guest]

You definitely want to inventory the baskets. However, I wouldn't bother segregating raw materials and finished goods as separate inventories since there is so little time between the creation of the finished good and the sell, in most cases. Note that McDonalds is a manufacturing business (raw materials become Big Macs), but we don't segregate the inventories for the same reason as above.