According to generally accepted accounting principles (GAAP), costs associated with outsourced manufacturing should be allocated to the inventory account and will appear on your balance sheet. When the products are sold, the costs are transferred from inventory to cost of goods of goods sold.

To capture this in Offtoa, enter the contract manufacturing as a raw material under assumptions/costs/raw materials in the menu. Under Raw Material Name, enter the name of what is being manufactured (usually a product or a partial assembly). Under Supplier, enter the name of one of the manufacturers, Under Name of Unit Purchased, enter the lot size being manufactured. Under Price, enter the price that you will need to pay the manufacturer for that lot.

Next, under assumptions/costs/costs of goods sold in the menu, define the number of finished products you will sell from one lot size by selecting the tab Raw Materials by Product.

Note: The above does not apply to an in-house manufacturing effort. See related questions.

Related Questions:

How handle factory/manufacturing employees?

Where do I enter/change raw materials? Where do I enter/purchase goods that I purchase?

How do I relate raw materials to products I sell?