How to Track Dental Lab Work-in-Process and Materials in QuickBooks

Short answer: A dental lab case that is still on the bench at month end is work-in-process (WIP) inventory, not an expense. Its cost, the materials plus the technician labor already put into it, sits on your balance sheet as a current asset until the case ships and invoices, and only then does that cost move to cost of goods sold (COGS). Precious-metal alloys are volatile-priced inventory best tracked by weight, since gold and palladium can swing a lot between the day you buy and the day you consume them.

Last updated July 2026.

Most small labs expense every material invoice and every payroll run the month the cash goes out, then wonder why margins jump case to case. The fix is to treat a case the way any manufacturer treats a half-built product: capture what it costs while it is being made, hold that cost on the balance sheet, and release it to COGS when the work leaves the door. If you want to skip straight to the data entry, you can convert a dental lab bank statement to QuickBooks and reconcile from there.

What counts as work-in-process in a dental lab

WIP is any partially completed case. The impression or scan has arrived, the technician has started building the crown, bridge, denture, or aligner, but it has not shipped and you have not billed the dentist yet. Everything already invested in that case has value: the zirconia puck or the alloy button, the porcelain, the acrylic, plus the labor hours a tech has logged waxing, casting, layering, or finishing.

Accounting treats those partially finished goods as inventory, a current asset, right up until the product is sold. The costs pile up in a WIP account, then transfer to finished goods, and finally hit COGS when the case invoices. The reason this matters is the matching principle: revenue from a case and the cost of that case should land in the same period. Expense the alloy in March but ship and bill the crown in April, and March looks artificially unprofitable while April looks artificially fat.

A simple worked example: moving a case from WIP to COGS

Say a single PFM crown case uses $40 of materials and 2 hours of tech time you cost at $30 an hour, so $60 of labor. Total case cost is $100. Here is the flow:

• While it is being built: $100 sits in Work-in-Process (an asset). Nothing has hit your income statement yet.
• Case ships and invoices at $250: you record $250 of revenue, and you move the $100 out of WIP into COGS.
• Result: $150 of gross profit lands in the same month as the sale. Clean.

If the case is still on the bench at month end, you leave the $100 in WIP so it shows as an asset, and keep it off COGS until the month it actually ships.

Setting up your inventory and COGS accounts

You want a short, deliberate chart of accounts so a case can walk from raw material to sold without guesswork. A typical dental lab setup looks like this:

QuickBooks Online Plus and Advanced support inventory items and quantity on hand, so you can carry alloy, pucks, and ceramics as tracked items and let each sale reduce quantity and post to COGS automatically. Many labs run a lighter periodic method instead: buy to Raw Materials, then move value to WIP and COGS with a month-end journal entry based on a physical count. Either works. Pick the one your team will actually keep current.

Precious metals: buying and consuming alloy by weight

Gold, palladium, and silver alloys behave differently from a bag of acrylic because the price moves. Palladium in particular has a long history of wild swings, driven partly by demand from the automotive catalytic-converter market, and it has at times been more volatile than gold. That volatility is exactly why you track alloy by weight (pennyweight or grams), not just by dollar cost, and why many labs refine scrap regularly rather than letting it sit.

When you buy alloy from a refiner or manufacturer such as Argen, record it as inventory, not an immediate expense:

• Purchase: debit Raw Materials Inventory, credit the bank or credit card, and log the weight received so your cost per pennyweight is on record.
• Consumption: when a tech casts a unit, move the weight used out of Raw Materials and into the case (WIP), then to COGS when the case ships.

Billing metal separately vs metal not included

Two common billing models change how the revenue side reads:

• Metal billed separately (pass-through by weight): you charge the dentist for the actual alloy weight used at a posted daily or weekly metal price, on top of the lab fee. This protects your margin when metal spikes, because the cost and the charge track together. Book the metal charge as revenue and the alloy consumed as COGS.
• Metal not included: your fee schedule states the price excludes precious metal, and metal is added at time of billing. Same idea, spelled out on the invoice so the practice is not surprised.

The point of both is to avoid quoting a fixed all-in crown price in January and eating a palladium jump in March. Weight-based billing keeps the volatile piece pass-through.

Per-case job costing

Real margin lives at the case level. For each case, capture two things: the materials consumed (alloy weight, one puck, so many grams of porcelain) and the tech labor hours times your loaded labor rate. Add them and you have the case cost that flows through WIP to COGS. Over a month, that shows which product lines actually pay.

Remakes are the honest test of this system. A remake carries real cost, more material and more tech hours, but usually zero additional revenue, since you are redoing the case for free. Track remake cost so it lands in COGS. When your remake percentage creeps up, gross margin drops even though your price list never changed, and job costing is what surfaces it before year end.

Outsourced milling and offshore work

If you send designs to a milling center or route full cases to an offshore partner, that spend is subcontracted production cost, so it belongs in a COGS account (Outsourced Milling or Outsourced Lab Work), not in office overhead. Coding it to COGS keeps your gross margin honest, because these are direct case costs just like alloy and in-house labor.

Track domestic subcontractors for 1099 purposes as you pay them. For 2026, the reporting threshold for nonemployee compensation on Form 1099-NEC is $2,000, so vendors you pay above that in the year generally need a 1099. Your accountant can confirm which vendors qualify; if you work with one, a shared file makes this painless, and a firm that handles bank statement to QuickBooks conversion for accountants can reconcile the subcontractor payments against your statements at the same time.

Month-end: valuing WIP and reconciling

At close, you need the value of cases still on the bench. Two practical ways to get it:

• Case list method: pull every open case, add its materials and logged labor, and total them. That total is your ending WIP asset.
• Formula method: ending WIP equals beginning WIP plus the manufacturing costs added during the month (materials and labor put into cases) minus the cost of cases completed and shipped. This mirrors the standard manufacturing WIP roll-forward.

Then reconcile. Your material purchases and refiner payments should tie to the bank and credit-card statements, and your WIP asset balance should reflect real open cases, not stale ones from three months ago. Labs handle a mountain of paper: case slips, the doctor's Rx, and material invoices from the alloy house. Rather than retype all of it, you can digitize the stack of paper case slips and material invoices instead of keying them by hand, then match the numbers against what cleared the bank.

Getting statement data into QuickBooks quickly

Reconciling only works if the bank data is actually in QuickBooks. If your bank feed is spotty or you are catching up several months, the fastest route is to take the PDF statement, convert it to a .qbo (Web Connect) file, and import it. The converter accepts PDF and image statements and outputs a .qbo you drop straight into QuickBooks Online or Desktop. Start on the bank statement to QuickBooks for dental labs page, generate the file, import it, then run your reconciliation against the WIP and COGS numbers above.

Frequently asked questions

Is a dental case still on the bench an expense or an asset?

It is an asset. A case in progress is work-in-process inventory, holding the materials and tech labor already invested. That cost stays on your balance sheet as a current asset until the case ships and invoices, at which point it moves into cost of goods sold and matches the revenue for that case.

Should I expense alloy when I buy it or when I use it?

Record alloy as inventory when you buy it, then expense it as COGS when a tech casts it into a case and that case ships. Expensing at purchase overstates cost in the buying month and distorts margin. Log the weight received so you always know your cost per pennyweight when prices move.

How should I bill dentists for precious metal?

Bill metal separately by actual weight used at the current metal price, either as a pass-through line on top of your lab fee or under a stated metal-not-included policy. Because palladium and gold prices swing, weight-based billing keeps the volatile cost tracking the charge so a price spike does not quietly erase your margin.

Where do remakes show up in my books?

A remake carries cost but no new revenue. The extra material and tech hours flow through WIP and land in cost of goods sold, while the case bills at zero. Tracking remake cost separately shows how much free rework is eating gross margin, which a flat price list will never reveal on its own.

Is outsourced milling a COGS or an overhead expense?

It is COGS. Milling centers and offshore partners perform direct production on your cases, so their fees belong in a cost of goods sold account like Outsourced Milling, not in office overhead. Coding it there keeps gross margin accurate, and paying a domestic subcontractor above $2,000 in 2026 generally triggers a 1099.