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Using classes to track profitability by product line

You can use classes to track income and expenses by the types of products you sell.

For example:

  • The Sample Manufacturing Company included with QuickBooks makes two kinds of pool covers: manual and automatic. That company could use classes to track whether they are making more profit on the manual or the automatic pool cover systems.

  • The Sample Wholesale-Distribution Company included with QuickBooks sells, buys and distributes light fixtures. That company could use classes to track whether they are making more money selling track lighting rather than bath or vanity fixtures. If bath and vanity fixtures has a much higher profit margin, that might influence how the company allocates advertising dollars the following year.

If you decide to use classes to track profitability by product line, you first need to set up classes.

To create classes for tracking income and expenses by product line

  • Create a class for each product line.

  • When you enter bills into QuickBooks, assign the appropriate product line to the charges in the Class column.

  • When you create an invoice, assign the appropriate product line to the income in the Class column.

    Note: You must customize the Purchase Order, Sales Order, and Invoice forms to add a Class column and make sure that you provide the information for each item. If you do not, some income and expenses may not have a product line associated with them, and reports will not accurately reflect profitability by product line.

If you create a class for each product line, you can view the Profit and Loss by Class report to see your business income and expenses categorized into the product lines that you created for your business. That report will calculate the total amount of income and cost by product line.

To see a sample of this report, open one of the QuickBooks sample company files. Go to the Reports menu, choose Memorized Reports, choose Item/Product Reports, and then click Profitability by Product Line.

See also

KB ID# H_MWD_CLASS_PROFITABILITY_PRODUCT_LINE
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PPRDQSSWS407 9138 Pro 2017 033e63